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22 I Companies & Markets bne May 2018
debt grow to very slightly short of the three-and-a-half month highs recorded earlier. Five-year credit default swaps (CDS) for Turkey rose 4 basis points from March 22’s close to 200 bps as Turkish assets sold off across the board, Reuters reported. This was just shy of the 201 bps reached on March 20.
The TRY’s drop to an all-time low seen during Asian trading hours was probably due to stop-loss orders from Japanese retail investors holding TRY trades against the yen, Koji Fukaya, CEO of FPG Securities in Tokyo, told Bloomberg.
Cemil Ertem, a top economic advisor to Turkish President Recep Tayyip Erdogan, said early on March 23 during a live broadcast on state-run TV channel TRTHaber that fluctuations in the TRY to more than 3.85 against the dollar were specula- tive and pushing the central bank for rate hikes to deal with temporary volatility in the currency would not be proper.
The central bank has in the past six years employed rate hikes when the lira depreciated by around 10% over a three-month period, William Jackson, an economist at Capital Economics, noted, adding that he would not expect the regulator to inter- vene before the 4.25 level.
The annual compound yield on Turkey’s 10-year benchmark domestic bonds reached 12.73% from 12.42% at closing prices on March 22 while the benchmark 2-year bond yields rose to 14% from 13.81%.
Looking at the likely horizon for the TRY, it is not just Trump’s
introduction of major tariffs against Beijing which has unsettled markets. The US president’s nomination for national security advisor of uber-hawk John Bolton, has added to worries over geopolitical tensions that could hurt demand
for risky assets.
The Goldilocks scenario for emerging markets of synchronised global growth is under serious threat from Trump’s protection- ist policies, Piotr Matys, an emerging markets currency strate-
“The central bank has in the past six years employed rate hikes when the lira depreciated by around 10% over a three-month period”
gist at Rabobank in London, told Bloomberg. “Escalated risk aversion is likely to further undermine already weak market sentiment toward the Turkish lira,” he said.
Stubborn double-digit inflation, a widening and big current account deficit, Turkey’s vulnerability to US Fed rate hikes, Turkish central bank reluctance to employ monetary tightening – with Erdogan in fact lately continuing to take an unorthodox path in calling for loosening – and Turkey’s high reliance on hot inflows of foreign capital are discomfit- ing investors.
WEEKLY NEWSPAPER
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Content:
2 Top Stories
6 The Regions This Week
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March 2, 2018 www.intellinews.com
Putin promises guns and butter in state of the nation speech
Ben Aris in Berlin
Russian President Vladimir Putin gave one of the most aggressive speeches of his career on March 1, promising the population a lot more “butter” and explicitly targeting the USA with “guns” if Washington continued to bully his country with sanctions and threaten it with missiles.
The speech was widely anticipated as the show-
Slaying of journalist sparks Slovak coalition crisis
bne IntelliNews
Pressure is mounting on Slovak Prime Minister Robert Fico after the murder of journalist Jan Kuciak, whose posthumously published article alleged mafia infiltration of his government.
Bela Bugar, the head of the junior coalition party Most-Hid, which holds three ministries in
Putin promised to increase the size of the economy by 50% in his next term of office.
case for the likely policies that will dominate
his next six-year presidential term. Russia goes to the polls on March 18 in an election that Putin is expected to win without a significant challenge.
But no-one was expecting the multimedia presen-
See page 2
Interior Minister Robert Kalinak has been attacked for his alleged links
to controversial businessmen.
Fico’s government, called for the resignation of Interior Minister Robert Kalinak, who has been under fire over a separate tax fraud scandal, the Basternak affair. Most-Hid argues only a new interior minister can investigate Kuciak’s
See page 4
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