Page 5 - TURKRptDec21

1.0 Executive summary
HAPPY NEW YEAR: This is the last Turkey Country Report for 2021. In January, we do not publish a monthly report. Please check out (if you do not have an email subscription for Turkey Today) pro.intellinews.com/turkey/ or intellinews.com/turkey/ for the Turkey Outlook 2022 report to be published in the first week of January.
Exceptionally, we may this year have a December with plenty of action given the ongoing severe lira depreciation and, on the global front, the new coronavirus variant and the Fed tapering. The Fed meeting release on December 15 and the Turkish central bank rate-setting meeting on December 16 are scheduled dates to watch.
At some point, the new year rally should begin (under normal conditions). Then, it’s Christmas and the new year’s eve breaks. Januarys are generally positive months with new year rallies that last through to the end of February.
Turkey Country Report will be back with the February 2021 issue. AGAIN: Turkey is on the edge (See Section 2.2).
HARDER: On November 18, the central bank cut its policy rate by another 100bp to 15%; that means that in all it has fallen from 19% in September.
The central bank also stated that it planned to complete the use of its “limited room” in December, suggesting the regulator will cut the policy rate again at its rates meeting scheduled for December 16.
On November 18, government-run news service Anadolu Agency reported, citing “information obtained by state-run Anadolu Agency’s reporter,” that Turkey’s government-run banks had cut their corporate loan rates by another 100bp as of November 19 in response to the central bank’s rate cut the day before.
The government-run banks also cut their monthly mortgage rates to 1.20% for homes cheaper than Turkish lira (TRY) 1mn ($90,100) and to 1.29% for homes more expensive than TRY1mn.
The 1.20% monthly rate implies an annual compound rate of about 15%.
No boom has yet been observed in the lira loans flow but action is beginning. Borrowers may wait until the rate-cutting cycle ends to obtain the lowest rates the cycle produces.
There is speculation that Erdogan wants to see monthly mortgage rates at below 1%, which would imply an annual compound rate of about 13% (See Section 8.2 below).
One note: The rate decision on November 18 should have been released at 14h. But, curiously, there was a five-minute delay. And such a delay has not been seen in recent decades. Even more oddly, no information was provided on the cause of the delay. There have been claims over insider trading as regards the central bank’s rate releases in recent years, which all too often cause exploitable market spasms.
BANG AND SHUDDER: USD/TRY: Latest record - the 13.8760 recorded on December 1. The feasible limit for the pair is currently found somewhere up in the sky but get ready for something of a U-turn somewhere along the way, likely involving the firing of the latest central bank governor.
5 TURKEY Country Report December 2021 www.intellinews.com