Cristian Maggio, head of emerging markets strategy at TD Securities, points out that the CBRT has held today the benchmark repo rate unchanged at 24%.
Key Quotes
“Slightly on a surprising side in the eyes of the market, the CBRT statement was copycat from the last one on 13 December. The only change that is worth highlighting is the addition of the following sentence to the third paragraph:
“Current account balance is expected to maintain its improving trend.”
“The market will have to reassess aggressive implied easing that was priced in at least until yesterday. This adjustment may lead to some moderate TRY appreciation, with USDTRY hovering for some time below 5.40, and a slight upside move in the the front-end of the curve.”
“However, as we explained in CBRT – The Best of Times, The Worst of Times, we think TRY is unlikely to receive much support ahead of the March local election and continue to see risks for both USDTRY and rates skewed to the upside.”
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