Analysts at Danske Bank note that the EMs had a tough day yesterday as the TRY continued its recent decline despite the Turkish Central bank (TCMB) applying more tools.
Key Quotes
“Although the TCMB doubled its o/n transaction limits, the implicit tightening did not convince the markets. In our view, the only credible step would be a sharp interest rate hike by the TCMB, as even a 300bp rate hike doesn’t seem to be enough in the current environment.”
“In Argentina, President Mauricio Macri asked the IMF to speed up its payment from the USD50bn credit line, as the government wants to ensure markets that it has sufficient funds through 2019. The central bank has already raised interest rates to 45% amid a looming recession (the second in three years). The peso ( ARS ) dropped to an all-time low yesterday.”
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