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much lower than their peers in other countries with those bothersome human rights issues.
On May 9, the Turkish central bank said in a press release on “Turkish Lira Liquidity Management”: “Considering the developments in financial markets, it has been decided to suspend the one-week repo auctions for a period of time.” The move came after the lira hit 6.25 against USD, its weakest level in eight months. The currency retreated to the 6.22s following the announcement. “What Turkey needs now again is a more compelling and more permanent hike in policy rates,” Ash said in a note to investors following the central bank move.
Outlier confident Erdogan is learning. Also on May 9, Thomas Clarke of William Blair International stepped forward as an outlier, showing what some might see as an incomprehensible confidence in Erdogan’s learning ability and the markets’ ability to intimidate the hardheaded strongman. “I think he has learned his lesson from the crash. The currency market can intimidate even Recep Tayyip Erdogan... That is a kind of a safety net that I think prevents Turkish policy from being thoroughly compromised, which would be very dangerous and would probably result in a one-way [route] for the lira downwards,” he told Bloomberg. Clarke has invested in the world’s worst- performing currency this quarter, but he’s not worried, and, in fact, he’s reportedly tempted to buy more. This glimmer of bullish sentiment comes with the lira having shed another 10% of its value since March—more than any other currency in the world tracked by Bloomberg. The scenario has prompted swap traders to position for another interest-rate hike, the news agency noted, while relaying how data from the Tokyo Financial Exchange last month showed Japanese retail investors holding the biggest long positions in the lira versus the yen since early August.
On May 17, central bank data showed that Turkey’s overall external debt repayment obligations for the next 12-month period edged up by 0.2% m/m to $177.4bn at end-March from $177.1bn at end-February. The figure stood at a record high of $185.9bn at end-February 2018 and declined to $173.9bn at end-October last year as a result of the ‘curing’ effect of the August currency crunch. When lenders’ and corporates’ obligations to their branches and affiliates abroad are excluded, Turkey was obliged to repay $156.3bn in foreign debts across the next 12 months as of end-March, up from $156bn as of end-February. Turkish lenders’ credit repayments across the next 12 months amounted to $43.8bn at end-March.
Spring season syndicated loan renewals concluded successfully albeit with lower roll-over rations and higher costs. Isbank, Erdogan’s favourite local lender during pre-election periods (our man typically bashes it for its links to main opposition party CHP, even though those result from a bequest left by founder of the Turkish Republic Ataturk), said on May 23 in a bourse filing that it had obtained a 367-day syndicated loan in two tranches of €644.9mn and $323.5mn. Isbank’s announcement suggested the end of Spring season in
45 TURKEY Country Report June 2019 www.intellinews.com