Turkish Lira: Liquidity Challenges Ahead
Declining volumes in currency trading has been an overriding theme as banks have been subject to stricter regulations on their trading activities. It is early to talk about the recent Trumpflation trade has caused any change globally, but when it comes to trading Turkish lira we still see that shrinking volume is an underlying trend.
Below we present the chart that shows total annual TRY trading volumes in form of forwards, spot trading and swaps.
November MPC: Waiting For Further Hikes
The monetary policy committee raised 1-week rate by 50 bps to 8% and the upper band by 25 bps to 8.50% vs a consensus expectations split between a 25 bps hike in the 1-week repo change and no change. As a separate decision, the central bank has decreased FX reserve requirements by 50 bps for all maturity brackets, providing $1.5 billion of liquidity to the financial system.
The move came despite the politicians’ strong remarks against high...