Page 68 - bne_Magazine_May_2018_print

68 Opinion
bne May 2018
He added: “Of course, demands from the government
make it difficult to predict what will happen, but it’s worth noting that the central bank faced similar rhetoric from the authorities prior to the hikes in 2014 and 2017. The big test will come at the next MPC [monetary policy committee] meeting on 25th April. If the lira remains under pressure at that point and central bank doesn’t tighten policy that will reinforce concerns that it is bowing to the government which could cause the downward spiral in the lira to gather pace.”
“This mismanagement of the currency leads to a loss of confidence in the purchasing power of the lira which is hard to cure,” Lutz Roehmeyer, who helps oversee about $14bn at Landesbank Berlin Investment, told Bloomberg on April 9. “Only massive one-off hikes can heal this situation, which is of course not popular as it slows the economy."
Two camps
Timothy Ash, senior emerging markets sovereign strategist at BlueBay Asset Management, said in a note that the government’s seeming prioritisation of more stimulus measures over "re-balancing" continued to unnerve investors. He added: “There are two camps in the Erdogan administration: the first in the go for growth camp, around [senior advisor to the president] Yigit Bulut; and then the more orthodox team rolled out to talk to foreign investors... who talk in favour of the need for ‘rebalancing’.
KRUK REPORT:
“At the moment, as per the administration's actions, the former camp seems to be winning – the Erdogan administration seems to be going for growth, at all costs, and without a willingness to hike policy rates, the lira has to take the strain.”
JPMorgan Chase & Co. said in a note that it remained underweight Turkey’s currency and bonds. It pointed to a current-account deficit that it forecasts will expand to 6% of output in 2018 and a deteriorating inflation outlook. The nation needs a “sizable” foreign-exchange adjustment and credible policy response, which may not be “imminent,” the bank said in a note released on April 6.
Turkish bonds fell on the day, pushing the yield on benchmark 10-year notes 8 basis points higher to 13.15%. That is close to the record high recorded last week.
The investment incentives announced by Erdogan will comprise of TRY137.4 bn being awarded to projects by companies includ- ing Vestel, Tosyali, Metcap and Sasa, the economy ministry said. The 23 projects would create 35,000 jobs and contribute $19bn to the current account, it added. The incentive package, accord- ing to the president, includes exemptions from customs tariffs and government support for employee insurance premiums.
The lira is the fourth-worst performer so far this year among more than 20 emerging market currencies.
Nadia Savchenko, Ukraine’s fallen hero
Kateryna Kruk in Kyiv
"Actus hominis, non dignitas iudicetur.” The acts of man, not dignity, are judged. I still very well remember how my heart was squeezing looking
at Nadiya Savchenko in a Russian prison. I remember how proudly we shared Nadiya photos and quotes in court. Today I found and read again the article I wrote about Savchenko's release from the prison and return to Ukraine.
She had been serving as a pilot for the Ukrainian army and was captured by rebels in eastern Ukraine before being sent to Moscow to stand trial on charges of murdering two Russian journalists.
This all was just two years ago but it feels like ages away. Today Nadiya Savchenko, a Hero of Ukraine, one of the most recognizable icons of recent Ukraine history, was stripped of MP's immunity and arrested. In that two years the one-time symbol of patriotism turned into an organizer of a potential terrorist attack on the state, aiming at destroying the Ukrai- nian leadership and overthrowing the government.
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Even for those who are following Ukrainian events closely, this sounds absurd and shocking. Definitely, there will be people left radicalized and angry with Savchenko's arrest, but the predominant feeling I see among my friends and social media reactions is: "How did we get here?"
Let's start from the very beginning. On March 8 Ukrainian border guards detained Volodymyr Ruban, a man known for his ties with Viktor Medvedchuk, the eminence grise of the Kuchma-era and a personal friend of Russian president Vladi- mir Putin. Ruban has also taken part in many prisoner swaps. However, this time he was detained with the vehicle full of weapons, including mines and mortars. Apparently, the Ukrai- nian Security Service (SBU) and General Prosecutor’s Office (PGO) have been following him for a long time, suspecting he was planning some terrorist attacks.
Ruban and his allies planned to shell central Kyiv and the government quarter with mortars, as well as homes of the key