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February 1, 2019 www.intellinews.com I Page 4
the markets at much lower amounts than project- ed. In addition, diversification of the instruments is prioritised with FX-based debt instruments making up the agenda currently,” Ozlem Bayrak- tar Goksen of Tacirler Invest said on January 28 in a 2019 economic outlook report for Turkey.
“Turkey’s recent troubles illustrate how govern- ment pressure to keep interest rates artificially low can lead to inflation and balance of payment problems,” Neil Shearing of Capital Economics said on January 21 in a commentary entitled “In defence of central banks”.
Anxiety over bond rates play
Shearing refers to policy rates in his commentary; however, the Turkish government has also been warned as to how maintaining artificially low do- mestic bond rates could end badly.
“#Lira gains after governor Cetinkaya implies market yields aren't much concern to the #CBRT,” Yalinkilic said on Twitter, adding: “#Turkey's 2-yr yields are now almost 6 points lower than the policy rate, yields lagging policy rate the most in at least 7 years. Next rate decision on March 6th.”
The Borsa Istanbul’s benchmark BIST-100 index continued with its rebound on January 30. The index was up 0.34% d/d to 104,455. It was in the doldrums in the 87,000s as recently as January 3.
“Market sentiment has turned more construc- tive on EM amid anecdotes of a healthy rebound in emerging market flows... Our trackers do not point to a convincing pick-up in flows beyond Chi- na with flows to key emerging markets like India
and South Africa quite weak, even after sizeable and persistent outflows during last year’s EM sell-off,” International Institute of Finance (IIF) said on January 24 in a research note entitled “How Big is the Rebound in Flows to EM?”.
More “revising” from TUIK
Meanwhile, Turkish statistics institute TUIK has again been “revising” its data series.
Turkey’s economic confidence index fell by 4.2% m/m to 78.5 in January from 81.9 in Decem- ber, TUIK said on January 30. But TUIK said on December 28 that the index rose by 2% m/m to 75.2 in December.
“Consumer confidence index has been published as seasonally adjusted since January 2019. Ac- cordingly, adjusted sub-indices have been also used in economic confidence index calculations,” TUIK said, explaining the jump in confidence. “Further evidence of extent of slowdown/reces- sion and deflationary conditions,” Ash said, com- menting on the economic confidence index in a separate note to investors.
“Private sector credit ratios have risen sharply
in Turkey and, to a lesser extent, Chile, Malaysia and Peru. Among these, the risks are greatest
in Turkey, where a greater proportion of lend-
ing was made in foreign currencies, the lira has fallen sharply and the economy is now in a deep recession. Banks so far don’t seem to be suffering acute strains, but rising bad loans and deleverag- ing will hamper the recovery,” William Jackson of Capital Economics said on January 25 in a re- search note.