1 May 2015
USD/TRY could keep the uptrend alive in the medium term – Rabobank
FXStreet (Edinburgh) - Piotr Matys, Strategist at Rabobank, believes the pair could inch higher in the medium term.
Key Quotes
“After being criticised for not cutting rates fast enough in Q1, Governor Basci will be reluctant to raise rates ahead of the elections and he will use all other tools at his disposal to prevent a full-scale currency crisis”.
“At its April meeting the CBRT raised the remuneration rate for required reserves maintained in liras by 50bps while trimming its 1 week borrowing rate for both dollars and euros by the same amount”.
“Such measures, however, proved insufficient to discourage speculators from betting against the lira. At some stage Governor Basci may have to use the big bazooka, as he did in January 2014”.
“On previous occasions prospects of the governing AKP staying at the helm would be seen as positive for Turkish assets. While the AKP is the favourite to win in June, political bickering might escalate if the party fails to secure an absolute majority in Parliament required to implement constitutional changes that would boost the president’s executive powers”.
“Soft US data may provide some respite, but unless the Fed signals that it will not raise rates this year (Q4 remains our call) and the CBRT starts defending TRY vigorously, USD/TRY will stay on an upside trend”.
Key Quotes
“After being criticised for not cutting rates fast enough in Q1, Governor Basci will be reluctant to raise rates ahead of the elections and he will use all other tools at his disposal to prevent a full-scale currency crisis”.
“At its April meeting the CBRT raised the remuneration rate for required reserves maintained in liras by 50bps while trimming its 1 week borrowing rate for both dollars and euros by the same amount”.
“Such measures, however, proved insufficient to discourage speculators from betting against the lira. At some stage Governor Basci may have to use the big bazooka, as he did in January 2014”.
“On previous occasions prospects of the governing AKP staying at the helm would be seen as positive for Turkish assets. While the AKP is the favourite to win in June, political bickering might escalate if the party fails to secure an absolute majority in Parliament required to implement constitutional changes that would boost the president’s executive powers”.
“Soft US data may provide some respite, but unless the Fed signals that it will not raise rates this year (Q4 remains our call) and the CBRT starts defending TRY vigorously, USD/TRY will stay on an upside trend”.