Page 79 - TURKRptJun22

bne June 2022
Opinion 79
lira deposit protection scheme and exporters and tourism companies, while the reserves are declining.
For April, the trade ministry reported a $6bn trade deficit, suggesting a month on month recovery but a doubling of the deficit compared to last year.
Turkey's Foreign Trade Deficit
It was last September that Turkey’s latest monetary easing cycle begin. Since November, the trade deficit has remained above the $5bn-level, accumulating to $45bn in the six month- period from November to April.
In May, a relatively limited recovery in external balances will continue as gas bills decline and the tourism season begins.
Turkey’s 5-year credit default swaps (CDS) have surpassed the 600-level while the yield on the government’s 10-year eurobonds remains in the 8%s.
There is no foreign interest in Turkish papers.
In April, net lira creation via loans amounted to TRY169bn as of April 27, following a record TRY208bn ($14bn) in March.
The regime is trying to introduce some "macroprudential measures" and non-capital controls while announcing new cheap loan packages.
Despite the eased monetary conditions, economic activity has not responded positively while Turkey's big export market, Europe, has endured its own slowdown since the beginning of 2022.
On May 4, the Fed’s open market committee hiked its policy rate by 50bp to a band of 0.75-1.00%.
In addition, the Fed will begin reducing its balance sheet as of June 1, with a monthly cap of $47.5bn by September and $90bn starting from September.
At the Fed press conference, governor Jerome Powell ruled out 75bp hikes.
On June 15, the Fed is expected to deliver another 50bp rate hike following its next market committee meeting. Updated projections from the governors will be released.
In March, the Fed governors anticipated the delivery of six more rate hikes in the remainder of 2022 to bring the policy rate to 1.75-2.00%. Two of them were delivered on May 4.
The USD index (DXY) remains above the 103-level, while the yield on 10-year US Treasury papers is below the 3.00-level. The EUR/USD is testing below the 1.05-level.
With the presidential election process in France concluded last week, the European Central Bank (ECB) and its French governor Christine Lagarde may get hawkish in the coming period.
Inflation in the Euro Area extended its record-breaking series to a sixth consecutive month with 7.5% y/y in April. Producer price inflation reached 37% in March.
Annual CPI inflation in the US rose to 8.5% in March.
In Turkey, social media is boiling over with anti-migrant propaganda. Hot-headed ideas are in circulation for transporting migrants back to their homelands.
Some ‘leaders’, who are aware of the required logistics even for carrying millions of watermelons to a wide geography spread from Syria to Pakistan, are ‘emerging’.
It costs nothing to swear at migrants on social media but hurling abuse at the person who has brought them to the
Turkish Lira Loans Monthly Flow
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