Analysts at Rabobank note that the Turkish lira plunged to a new all-time low of 6.30 this morning and currently trades at 5.92.
“Unless the central bank steps in (or: Erdogan caves in) and raises interest rates and unless Turkish officials make a serious effort in reconciling the diplomatic differences with the US and also the EU, this increasingly destabilising sell-off isn’t going to stop anytime soon.”
“The threats of further sanctions over the detention of pastor Brunson linger as recent meetings have produced next to nothing. There was a bit of movement on the economic front, however, as the Finance Ministry laid out its updated roadmap for the Turkish economy. It said that 2019 GDP growth is seen at 3-4% rather than 5.5%, that the current account is aimed to stabilise at 4% and that inflation should return to single-digit figures as soon as possible.”
“Erdogan will speak at 2 PM local time and it has been reported that Finance Minister Albayrak will first give a briefing this morning at 11 AM local time. Hopefully, this will put some flesh on the bones of this roadmap, but keep in mind that the CBRT has consistently missed its 5%-inflation target over the past decade. Just talk without the support of action will eventually mean nothing, a lesson that the market is happily willing to teach Turkey – which in turn actually should have learned this by now.”
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