Page 40 - TURKRptJun20

Management said in response.
7.0​ ​FX
Turkey FX
Dec-18
Jun-19
Jul
Aug
Sep
Oct
Nov
Dec
Jan-20
Feb
Mar
Apr
May 28
USD/TRY (eop)
5.29
5.79 5.59 5.83 5.65 5.71 5.74 5.95 5.98 6.24 6.61 6.97 6.82
The advent of “Turkish QE” was an understandable move given the need to provide a quick lifeline to people financially stranded by lockdowns, but populist regimes do tend to go on a binge given half a chance.
Erdogan is simultaneously printing money and selling central bank reserves to slow the lira depreciation.
“It’s actually quite interesting seeing someone trying to give two fingers to economic or financial logic,” one foreign fund manager, who asked not to be named, told the Financial Times, adding: “They’re really digging themselves quite a decent hole.”
Erdogan sold $66bn from January 2019 to March 2020, including $32bn in Q1 2020.
It is not just Turkey’s leader who is raising eyebrows on the currency markets. His arch-enemy, Egyptian coup leader Abdel Fattah el-Sisi, is also up to no good. The Egyptian pound has been a rare riser among emerging market currencies beaten down by coronavirus fallout, but pressure is growing on it to beat a retreat, Reuters ​reported​ on April 28.
On April 30, Turkey’s central bank governor Murat Uysal claimed during an online press conference held for the release of the latest inflation report that his institution was not seeking to defend a specific level for the lira.
And that is partially true since the central bank merely acts as the accounting department of the palace administration. It provides dollars to the dutiful state lenders through the backdoor and the “native and national FX team” at those banks sell them in the lira market.
It is possible that Uysal may have no idea which level exactly Turkey is seeking to defend.
40​ TURKEY Country Report​ June 2020 ​ ​www.intellinews.com