Page 5 - TURKRptApr21

1.0 Executive summary
Has Erdogan totally lost sight of reality? On March 19, he fired the third central bank chief in less than two years. Balance of payments crisis and authoritarian crackdown seem ahead.
Turkish lira has been defended so far while all Turkish assets were heavily sold and foreigners fled away. The lira finished the first turbulent week at more than 8.10 to the dollar.
How short can Turkey go to defend its currency? When will the lira dam break? Another inflation tsunami is on the way.
So far, no additional capital controls have been announced. Putting a brake on the lira may require hardcore capital controls.
When will the policy rate be cut?
Joe Biden hit Russia’s ruble (RUB) with calling Vladimir Putin “a killer” during an unscripted live interview on television. No tangible move or signal against Erdogan yet. But, may the lira fall victim to a stray bullet from a public relations gunfire?
On the planet Earth, the tensions seen between the Fed and the markets remain unsettled. The Fed and its Treasury branch, namely former Fed chair and current US Secretary of Treasury Janet Yellen, parrot the line that the money printing will continue in the foreseeable future, whatever the inflation rate turns out to be.
However, it seems that it is more profitable at the moment to not believe in the Fed.
US President Joe Biden’s $1.9 trillion stimulus package is now a past event that was already priced and negatively affected the US Treasury yields, while the chatter about upcoming tax hikes is not helpful in terms of relaxing the market. Let’s watch for when the tensions between the policymakers and the markets settle down ahead of a positive mode taking over.
The market is currently pumping commodity prices while asking for higher official inflation rates and higher interest rates across the globe.
Turkey’s official daily count of new coronavirus (COVID-19) infections hit 26,182 on March 23, the highest figure seen since mid-December.
Twitter has decided to establish a legal entity in Turkey to comply with the country's new stringent social media law.
Stress in mega projects continue.
Turkey’s problem loans ratio appeared to reach 15.2% at end-January. Isbank
sold NPL portfolio prior to central bank governor turmoil.
Turkey Wealth Fund renewed syndicated loan at 125% rollover rate and 25bp lower cost. Akbank is awaited to launch the spring syndicated loan renewals season for Turkish banks.
Oyak Renault and Tofas halted production as the global chip crisis reached Turkey.
5 TURKEY Country Report April 2021 www.intellinews.com