Follow us @middleeast for more news on the region.
The lira weakened for a fourth day in a sign to traders that the central bank’s efforts to stem its declines by raising the average cost of borrowing are falling short.
The Turkish currency slid almost 0.4% versus the dollar, bringing its depreciation this month to almost 6%, the most in emerging markets.
The central bank has sought to anchor the currency by raising the cost of funding ahead of Thursday’s policy meeting. While the benchmark one-week repo rate is at 8.25%, policy makers are offering funding though more expensive channels. On Monday the central bank lent 10b liras in a conventional auction at a 11.25% yield.
For Deutsche Bank AG’s Christian Wietoska, the lira’s retreat shows the policy isn’t working.
“We target 12% by September and in case lira does not stabilize,” he said. “Anything else would keep the pressure high on Turkish local assets, particularly during periods of a deteriorating external backdrop.”
The central bank will probably raise the rate to 10% on Thursday, he said.
- USD/TRY +0.3% at 7.3920
- 10-year benchmark dollar bond yield +4bps to 7.05%
- 5-year CDS little changed at 566bps
- Borsa Istanbul 100 Index -0.2% to 1,081.83
- U.S. Treasury 10-year bond yield -1bps to 0.7%
- Brent crude +0.8% to $45.17 per barrel
What to Watch:
|Home Sales||Jul||no est.||190.0k|
|Home Sales (YoY)||Jul||no est.||209.7%|
|Central Gov’t Budget Balance||Jul||no est.||-19.4b|
- Turkey in a Stir Over Biden Remarks Backing Erdogan’s Ouster (1)
- Turkey’s Homemade Economic Pain Won’t Cost Traders Any Sleep
- Cavusoglu: Greece Shouldn’t Harass Turkish Seismic Ship
Source: Read Full Article