Turkey

This is what has changed in the EM space in, our view. 1) Brazil is stepping up its defences against market volatility. 2) Signs that China is looking for more (and better) sources of external funding sources is mounting. 3) Turkish…

Editors note: Moody’s released the following press release yesterday in conjunction with a ratings action it took on Turkish sovereign debt. Moody's Investors Service has today upgraded Turkey's government bond ratings by one notch to Baa3…

Why is the global economy hamstrung by heavy debts and weak banks? Or put another way, why doesn’t deleveraging happen, and the weight of debt reduce, and why doesn’t the economy expand so the weak banks can once more become robust and…

The central bank intervened aggressively in September-October to limit TRY weakness, but it does not have a huge war chest like Brazil or Asia. Reserves were $84.4 bln at the end of October, down 10% from a peak of $93 bln in July. Reserves…

The Turkish central bank took a turn back to orthodox policy today despite leaving the benchmark 1-week repo rate unchanged at 5.75%. It dropped the language from several previous meetings about potential easing. The bank did hike the…

Markets have been punishing countries with the weakest fundamentals, focusing on either high inflation, large current account and budget deficits, external debt loads, or a combination of these. These other vulnerability measures in the…

In the EMEA space, central banks from Czech Republic, Hungary, South Africa, and Turkey all meet next week. We don’t see any change from these four central banks and in general we believe EM central banks have moved into dovish wait-and-see…

US growth concerns and downgrade risk remain in play after budget deal. Euro zone periphery remains under pressure as ECB meets Thursday. SNB takes action against strong CHF; spike in EUR/CHF offers good entry point to go long CHF.

If the strongest argument against going back to the Drachma always was that this would imply default, now that default is coming, why not allow Greece to devalue? As Krugman says, the issue isn’t whether Greece would openly decide to exit…

The Turkish lira is under pressure today, and is also due to some market concerns with central bank credibility. Like in Brazil, Turkey macroprudential policies simply have not worked.