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Analysts at TD Securities explained that the currency crisis in Turkey is still unfolding.  

Key Quotes:

“USD/TRY moved another 7% higher since Friday close as the government and the CBRT have failed to acknowledge the seriousness of the situation, and provide markets with a proper and timely response (USDTRY is up 30% in three days).”

“In an attempt to minimize the impact of the lira slide on local banks, the CBRT announced measures on FX reservesand financial markets earlier today.”

“However, the impact is limited so far as much more drastic measures are required to stabilize the lira, before its plunge turns into a much bigger problem for macro-financial stability in Turkey.”

“Moreover, some of the announced measures may help in the short run, but will lead to faster FX reserve depletion going forward.”

“We continue to think that aggressive rate hikes to around 30% are necessary to support TRY.”

“In the absence of realistically effective measures, we are likely to continue seeing the Turkey crisis spill over into other markets, starting with the high beta EMs such as South Africa, Russia, Brazil and Mexico. Fixing the Turkey crisis, however, also means helping these other markets recover at least some of then recent weakness.”