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The lira was indeed flat on October 17 as Turkey’s state banks continued to squeeze the offshore swap markets to support the currency, ahead of the talks in Ankara between Turkish President Recep Tayyip Erdogan and US Vice President Mike Pence and US Secretary of State Mike Pompeo over the incursion into northeastern Syria, according to Reuters.
One-year dollar-lira swaps were down by 1bp to 16.69% as of the early trading hours of October 17 after jumping more than 60bps on October 16, Bloomberg reported.
Bank stocks transaction volume sinks. The transaction volume on the Borsa Istanbul’s banking index (XBANK) fell to $179mn on October 16 from $522mn the previous day.
It was the lowest figure seen in the past four months, coming in at 66% below the 20-day average, according to Bloomberg.
As of 16:30 local time on October 17, only $76mn worth of transactions was recorded in the banking stocks.
The overall transactions volume on the Borsa Istanbul also fell. It was recorded at $1.43bn on October 16 from $1.76bn the day before, while it stood at $918mn as of 16:30 local time on October 17.
Consequently, the benchmark BIST-100 remained above 93,000 while the USD/TRY rate was below 5.90 for most of the day before spiking to 5.927 at just past 19:00 local time.
Turkey’s benchmark 2-year and 10-year domestic government bond yields were above 15% while the country’s 5-year credit default swaps (CDS) remained below 400 and Turkey’s eurobonds showed a mixed picture across the curve.
The domestic government borrowing market has essentially been suspended since November 2018, but the reactions seen in the CDS indicators and eurobond markets to recent Turkey developments have been telling.
2.2 The Syria Attraction: Putin and Trump tell Erdogan to stick with what he has, but Erdogan needs more
As of November 2, Putin-Trump left the grey region to Erdogan, Putin-sponsored Assad took over the control of the orange regions from Kurds, Trump-sponsored Kurds (yellow) still control oil fields.
...and on the 8th day, October 16, Erdogan’s adopted jihadists, backed by the Turkish army, appeared to halt their fast advance following the previous day’s phone call between the stroppy strongman—who, er, was still threatening to
7 TURKEY Country Report November 2019 www.intellinews.com
