Lira getting Stronger - Why?

[Colwyn]

Click, 2.93.

[Colwyn]

Click. 2.94.

[kevin3]

 Has touched  3.00 to the dollar and a new record according to the Hurriet Daily News

 TL 4.64 to the pound

 Turkeys Election date is  November 1st.

[Colwyn]

Yes, the markets started with a bang today with the $ rocketing to 3 and the £ following it to 2.7 before they both settled back. Basci has said he is saving rate rises until the Fed increases its own interest rates. Although this could happen in September it might be postponed to March 2016. Favourite in the betting is December. However this would still be a long period of inaction. Since last Wednesday the lira has lost 6.4% against the $. Can the Turkish economy really afford to bleed away at this rate for months?

[usedbustickets]

Basci has said he is saving rate rises until the Fed increases its own interest rates. Although this could happen in September it might be postponed to March 2016. Favourite in the betting is December.

That would be the first opportunity after Reg's likely enforced General Election in November....so much for the Turkish Central Bank independence, and they wonder why the lira continues to plummet!!

[kevin3]

 The economy would be allowed to bleed by the bucketful if it serves the ambitions of the "Great One".

 A few months ago I suggested the Lira would climb to 5.00 to the pound. I stand by that.

 I feel sorry for poorer Turkish folk.

[JohnF]

Given that Basci almost found himself charged with "treason" for not doing little Reginalds bidding earlier on in the year, I don't think it's any surprise that the TCB appear to now toe the party line.  As Colwyn said, the lira fell to 4.70 against the pound and over 3.00 before rallying slightly - nobody in Ankara appears to have a solution, although they're quick to point fingers of blame...

JF

[kevin3]

 I'ts the turn of the Interest Lobby to carry the can this time.

[Scunner]

Strange activity today?

[Colwyn]

In a way Scunner. I think for the last week the daily pattern has been lira dropping like a stone in the morning then recovering in the afternoon (although sometimes falling back at the end of the day). The difference today has been the scale of the recovery. Apart from increasing main rates, or tinkering with fringe rates, the Central Bank has two significant tools. One is Basci reassuring the money markets that he is on top of things and quite prepared to act when the right time comes. He used to be very keen on this confidence building five years ago and gained an international reputation among central bankers for his innovative approach (lots of CBs now put big emphasis on talking to key money market figures. The second thing is to chuck money at the problem. To use Turkey's dollar reserves to buy lira and shore it up. I haven't seen any reports on whether either of these have been happening today.