Page 10 - TURKRptAug22

● USD/TRY: Latest record - 18.8760 recorded on December 1. Since July 25, USD/TRY has been testing the 18-level.
Turkey’s five-year credit default swaps (CDS) saw 908 on July 15. The yield on the Turkish government’s 10-year eurobonds remains above the 11%-level.
● Balance of Payments: The current account deficit ran wild again and hopes are pinned on tourism revenues in the summer.
Financial flows stopped; as a result, they are stable. Turks are waking up as the USD/TRY rate is rising again.
Debt-rollovers continue undeterred but with no fresh inflow. Eurobond auctions stopped in March. Net FDI remains around zero. Nothing much comes via unidentified flows channel.
The Turkish central bank’s net FX position stood at minus $63.7bn as of July 28 (Chart by @e507).
● Eurobond auctions: Nothing since March.
● NPLs, bailouts and debt restructuring queues build up.
● Snap polls: Anyone expecting Erdogan to vanish quietly should probably think again. He has three options:
- He can delay the elections (a war, perhaps even the ongoing conflict in Ukraine, is the legal option for a delay).
- He can go for a harder dictatorship, just as Alexander Lukashenko did in Belarus.
- Or, Erdogan can hand over the presidency (though losing its protection would spell big trouble for both him and his family across the globe).
Erdogan will try any chance he gets. The risk of blood on the streets remains significant.
Political assassinations, terror attacks, some other bloody moves (as seen in the June-November 2015 period), closure of the pro-Kurdish Democratic Peoples’ Party (HDP) (the HDP has reserve parties, this move will not make sense), the seizure of the Istanbul Municipality, the jailing/banning from politics of Istanbul mayor Ekrem Imamoglu – these are among expectations for the period ahead.
10 TURKEY Country Report August 2022 www.intellinews.com