Page 27 - BNE_magazine_06_2020 Growers

bne June 2020 Companies & Markets I 27
lative trading, while the spreading of “misleading or wrong information” as regards financial assets by any mass media tool would be considered manipulative, the new regulation also stated.
“Lots of people have focused on the Albayrak call [with investors on May 6] as the driver for the TRY weakness yesterday. I don’t think that is the case, as the TRY had already started weakening earlier this week... On the Albayrak call,
I thought he did a decent job, and the Treasury prepared presentation was good – lots of data/info and Albayrak highlighted key strengths which are often overlooked,” Timothy Ash of Bluebay Asset Management said after the BDDK regulation was issued in a note to investors.
“I guess there was not that much new, and there was no new info on progress on securing FX SWAPs from friendly central banks, and he gave a straight bat on the IMF front. I have to
“We can say martial law has been declared on FX markets. Everything’s considered to be manipulation”
say that compared to lots of presentations from MOFs [finance ministries] in EM I have seen in recent weeks on COVID19, this was one of the better ones. But the problem for the TRY
is more fundamental at this stage... the market does not trust monetary policy in Turkey,” Ash added.
Another slash in the wind
Wags on the market commend Albayrak for delivering the best PowerPoint slide shows across the EM universe – but, more seriously, they’re quick to add that the Turkish central bank has little or no credibility left, thus the finance minister really should come up with some more meaningful content if he’s not to find himself taking yet another slash in the wind. Who murdered that credibility? Perhaps “some London-based financial institutions”?
Academic and market commentator Evren Bolgun was one of many observers dumb-founded by the new BDDK regulation, writing on Twitter that no other country has such an open- ended and unjust regulation.
“We can say martial law has been declared on FX markets. Everything’s considered to be manipulation, i.e. saying that the central bank’s net reserves are negative or at $3-10bn is becoming manipulation,” Uskuay also observed.
The new definition of manipulation by the BDDK covers everybody and everything from the investor to the broker, the commentator, the man on the internet, the man on the street, information, analysis and the set down content of a commen- tary, he added.
Former central banker Ugur Gurses, who is considered by the Erdogan media as one of the leading pawns of some lobbies in Turkey, has published an “FX intervention guide” for “those who have a passion to intervene in the exchange rate but who do not have enough experience to do it”.
Some of his basic points are as follows:
• Hike your policy rate
• Never hide your balance sheet
• Never stop releasing a data set that you’ve regularly released • Don’t carry off-balance sheet assets or liabilities such as
swaps
• Don’t forget everyone sees everything
• Your argument of “All reserves are usable” would be stronger
in parallel to your transparency
• A discredited central bank’s reserves are always discussed • Always control whether the currency depreciation is due to
FX liquidity
• If depreciation is due to economic fundamentals, leave the
exchange rate rather than holding it
• Don’t give the message of “I want more FX” by hiking
lenders’ swap limits at volatile times
• If you intervene in the exchange rate under a free-float
regime, you give the message of “fear of fluctuation”
• Showing the strong demand via wrong interventions is like
inviting “sharks” to the beach
• If you’re applying a free-float regime and, at the same time,
you stubbornly want to intervene in the exchange rate, don’t intervene as a “rookie trader” by defending the “resistance” levels, but do it as a central banker
• Never snub your exchange rate policy to a “second hand” even if it is a broker at a state bank.
Watch what you say about the lira. Ankara is watching you.
www.bne.eu