Turkey this week caught the markets attention on two occasions, the first, after Moody’s upgraded Turkey’s sovereign bond ratings to investment grade (Baa3), in line with Fitch at BBB- and above S&P at BB+. The second time occurred after Turkey’s Central Bank extended its monetary easing cycle.
The rating upgrade has been a part of “consensus expectations for an extended period and was one of the main drivers of real money demand for Turkish bonds in the past 12-months.” Investors and dealers who do not normally take a look at this investment “name” have been sucked into consideration. Analysts note that “an outright increase in the reserve requirement ratios for the banks’ FX-denominated liabilities” late week introduced an element of tightening, which was not part of the last months mix.
The market is expecting their domestic currency the TRY to succumb to a positive near-term reaction to the most recent upgrade. However, the issue of “hot-money” flows (first appeared last November when Fitch rated Turkey investment grade) could leave the country vulnerable to economic and financial instability.
- Greek PM Heads to China on Trade Mission
- EZ and US Inflation Falls Back On Weak Energy Prices
- ECB Would Like Seeing EUR/USD at 1.2870
- EUR/USD at 1.2875 as Inflation Set to Fall to Three-Year Low
- France’s Role in Europe’s Future
- BoE King Leaves Optimistic Parting Gift for UK Economy
- Eurozone Economy Continues to Contract
- Russian Banks can withstand a 5% Shrinkage in Economy
- EU Regulators investigating Oil Price Fixing
- Fitch Upgrades Greece to B Minus Outlook Stable
- EU Factory Output Surprise Rise Driven by Germany
- Germany and France Once Strong Economic Allies Now Partnership Crumbling
- UK Drops in Economic Wellbeing
- Europe Divided Over Banking – ECB vs Germany
- Cyprus Continues to Look at Russia for Bailout Help
- ECB Member Central Bank Technically Prepared for Negative Interest Rates
- UK Government Divided on EU Membership
- Europe Austerity May Have Reached its Political Limits
This article is for general information purposes only. It is not investment advice or a solution to buy or sell securities. Opinions are the authors; not necessarily that of OANDA Corporation or any of its affiliates, subsidiaries, officers or directors. Leveraged trading is high risk and not suitable for all. You could lose all of your deposited funds.