Cristian Maggio, head of emerging markets Strategy at TD Securities explained that they expect a 275bps hike of the WACF, which should support TRY in the short term (a possible 3-7% appreciation before the end of the week to around 6.0/6.25).
Key Quotes:
“But if the CBRT fails to deliver at least 175bps of WACF tightening, we see USDTRY moving higher to 6.60/6.75.
A hike in excess of 200bps will push the very front-end of the curve higher relative to longer tenors. The whole should move higher and flatter beyond 1yr, but it’s likely to steepen up to 1yr. A hike below 200bps is likely to see the opposite: front-end rates lower, and the curve flatter to 1yr.”
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