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What do central banks do? Or do they?

AS I PEN THIS, London interest rates on overnight s aps for TRY hit 1400, the highest in a decade. That may have limited the first impact on the level of the TRY/USD exchange rate. Because foreign banks demand TRY so they can sell and turn to dollars – and run – TRY scarcity has...


Fixed income, Fed, and CBRT

THE SPREAD BETWEEN US 2-year and 10-year notes was 0.37 exactly a year ago. Now it stands at 1.47. This kind of normalization entails a strong expectation of genuine recovery, especially after the Biden bill passed. It also underlines a reflation scenario. With fiscal packages amounting to USD 5tn, nearing a quarter of the U.S....


This isn’t a rate hike?

T H E C E N T R A L B A N K’ S policy rate, which the bank decided to use to regulate the market, declaring it the real rate, still stands at 8.25%. But the weighted average cost of funding has increased to double-digits after five and a half months. The Central...


Dominant currency, foreign trade, and the exchange rate

THE LIRA has almost always been weak since 2013. Lira strength is but a remnant of the past. After the 2001 Crisis when the Dervis-IMF programme was in vogue, and the ‘savings glut’ flooded the globe with cheap dollars, the TRY gained strength. That was the episode between 2003 and 2008. Somehow people were called...