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Cristian Maggio, head of emerging markets strategy at TD Securities, notes that the CBRT held today the benchmark 1-week repo rate unchanged at 24% in line with the unanimous consensus and their forecast.

Key Quotes

“All secondary rates have also been held so that the WACF should continue to hover at around 24% in the coming weeks.”

“As anticipated, most of our focus would be placed on the statement and forward guidance: both have changed very little in what appears to be mostly adaptation to the new economic conditions, especially a very marginal improvement in the CPI dynamics.”

“Going into the meeting, the market had a modest bias for a dovish outcome (approximately 60% chance of a 25bps rate cut – but measurements of implied rate expectations are admittedly inaccurate on such a small scale of rate change). This means that the lira is currently being well supported – a move that started about an hour ahead of the announcement – and trades at around 5.3755 vs USD, or 0.2% stronger on the day. The daily peak in TRY was recorded at 5.3655, about 0.4% on the day, shortly after the announcement. We, however, continue to hold a bearish view on TRY that we expect to weaken by ca. 40% vs USD by Q3.”