Turkey’s Confab at JPMorgan HQ Looks to Break Ice With Investors

Source:Bloomberg Date:11Jan2024

“The challenge right now is that the cost of hedging the currency risk is very high, around 40%,” said Grant Webster, a portfolio manager and co-head of emerging markets at Ninety One in London. “Investors need to take a long-term view, which is not easy in Turkey given the recent history of policy missteps.”

Brendan McKenna, an emerging markets economist and foreign-exchange strategist at Wells Fargo Securities LLC, said a show of support for even higher rates may shore up confidence.

“Real rates are still deep in negative territory and not high enough to reverse the current inflation trend,” he said. “Not tightening further also risks backtracking on credibility, which can result in further lira depreciation and push inflation even higher.”