6 Mar 2015
Turkish lira could recover ground in the medium term – BAML
FXStreet (Edinburgh) - In the view of analysts at BAML, the Turkish lira could strengthen in the upcoming periods as most of the pressure on the central bank could be already priced in.
Key Quotes
“The strong positive buzz around the Turkish investment case due to lower oil prices and global rates has been ditched by investors recently”.
“In retrospect, this sudden change of heart is not surprising, in our view, given all the discussion around the emergency rate cut, rebound in oil prices, negative headlines around Bank Asya and weaker TRY. But we do not believe it is justified either”.
“We are still looking at a significant rebound in domestic demand growth of about 3pp in 2015, a significant decline of about 3pp on average in CPI inflation despite TRY weakness and a significant 1.5pp improvement in the current account deficit”.
“TRY weakened given political pressures on the CBT; however, we believe much is now priced in and CBT funding rates actually remain persistently high. We remain long versus the basket and ZAR”.
Key Quotes
“The strong positive buzz around the Turkish investment case due to lower oil prices and global rates has been ditched by investors recently”.
“In retrospect, this sudden change of heart is not surprising, in our view, given all the discussion around the emergency rate cut, rebound in oil prices, negative headlines around Bank Asya and weaker TRY. But we do not believe it is justified either”.
“We are still looking at a significant rebound in domestic demand growth of about 3pp in 2015, a significant decline of about 3pp on average in CPI inflation despite TRY weakness and a significant 1.5pp improvement in the current account deficit”.
“TRY weakened given political pressures on the CBT; however, we believe much is now priced in and CBT funding rates actually remain persistently high. We remain long versus the basket and ZAR”.