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“The CBRT has today announced the suspension of the one-week repo auctions due to “developments in financial markets.” This is the first time since 14 September 2018 that 1w repo auctions are suspended,” noted TD Securities analysts.

Key quotes

“The CBRT has not disclosed why, but we believe this is entirely dictated by the strongly adverse moves of USDTRY in the past few days. TRY is -2.9% vs USD today and -5.1% since the start of March.”

“We believe it is particularly alarming for the CBRT that USDTRY has continued to nudge higher despite a period of relative market calm and state-owned banks trying to keep the pair anchored.”

“The move may be surprising for the market. It implies rate cuts of approx. 600bps in 2019, and 1000bps by end-2020. However, we are not surprised. We continue to forecast a 400bps increase in rates in Turkey this year, on the back of sharp lira depreciation to 8.90 by end-Q3 as we continue to hold a very bearish view on Turkey.”