Turkish Lira Soars Over 1000 Pips In Hours On Central Bank Intervention Suspense

Turkish Lira Soars Over 1000 Pips In Hours On Central Bank Intervention Suspense

As we noted earlier, the “surprise” factor of the Turkish Central Bank’s (CBT) emergency meeting is seeming to have the desired effect as the Lira has

 

    * Market looking for “serious” interest rate hike

    * Increase in overnight lending rate to 9% “most likely outcome,” although unclear whether bank will be able to defy government pressure not to raise rates
    * Bank appears to have lost credibility with market

  * Societe Generale (Benoit Anne)
    * Rates need to rise by at least 100bps, ideally 200bps
    * Expects other central banks to also step back into FX market, including Brazil BCB and India RBI

  * BBH (Marc Chandler)
    * Capital controls are a possibility, could take “many different forms
    * 100bp rate increase would be ‘‘nice,’’ market would press for more

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