The CBRT Monetary Policy Committee (MPC) increased the one-week repo auction rate, which is the policy rate, by 750 basis points to 25 percent.
In the CBRT announcement, the justification for the said decision was cited as the recent indicators pointing to the continuation of the rise in the underlying trend of inflation.
“The current trend of TL may be the beginning of a rally against the dollar in the coming weeks”
Piotr Matys, Senior FX Analyst at In Touch Capital Markets, said in a statement. “The CBRT sent a very strong signal to investors that it was determined to control inflation by significantly exceeding market expectations and raising interest rates significantly.” said.
Pointing out that TL is the currency with the best performance against the dollar after today’s decision, Matys emphasized that this is an important step in restoring confidence in TL.
Expressing that the current trend of the TL against the dollar may be the beginning of a rally in the coming weeks, Matys said that President Recep Tayyip Erdoğan’s comments on this issue will be followed closely.
Bluebay Asset Management Emerging Markets Senior Strategist Timothy Ash stated that the CBRT made a strong move by increasing the policy rate by 750 basis points, well above the expectations.
Citi: We are raising our TL weight reduction recommendation to neutral in our model portfolio
In the note prepared by Citi, one of the leading banks of the USA, for its customers after the CBRT interest rate decision, “After today’s surprise interest rate hike, we are closing our USD/TL buying positions and increasing our TL weight reduction recommendation in our model portfolio to TL neutral level. After the macroprudential measures announced by the CBRT over the weekend to reduce KKM, we opened a buying position in USD/TL earlier in the week. “We are closing these transactions (with a total loss of minus 4.49 percent from 26.06 percent) after today’s surprise rate hike. We expect to hear additional comments from policy makers on the new direction and sustainability of this policy path. We are also raising our TL weight reduction recommendation in our model portfolio to neutral.” expressions were used.