Turkish "central" attempts to combat the "hot" money flow on the lira

Türkiye’s policymakers are reducing the flow of the so -called ‘hot money’ to the lira, in an effort to address one of the most profitable bets on currencies in the world. Although the central bank is holding its grip on the lira market, and that the currency can gradually decline, clients indicate that the market movements are recently less predictive. Bloomberg accounts indicate that the lira has dropped at a rate of more than four to four times the usual decline in the rest of the week during the past Friday days. This accelerated drop will weaken a short -term investment strategy that was popular and dependent on the purchase of the lira Thursday night through exchange contracts for a night to earn interest this weekend and then filter the centers on Monday. But any sharp decline in the lira Friday makes these bets useless. Türkiye is attractive for interest rates in the central bank to about 50%. Türkiye has become an attractive destination for the so -called “interest trade” offerings; Where investors borrow low interest countries and pump money into high interest rates. According to well -known people who have asked not to reveal their identity, Turkish officials are working to combat this very palace flow in terms of time, fearing that rapid exit operations will lead to serious fluctuations. This actually happened last March, when the Lira fell by 10% within a few hours after a sudden arrest of the Mayor of Istanbul Akram Imamoglu, the most prominent competitors of President Recep Tayyip Erdogan, who has ruled the country for more than two decades. Finance Minister Mohamed Shimchk said at the time that heavy sales resulted in foreign investors being out of their positions in the lira. ERKIN Ishik, chief economist of QNB Bank in Istanbul, said: “Authorities do not show great enthusiasm to attract the flow of trade over short -term interest,”, adding that officials “saw large fluctuations in the exchange rate and foreign exchange reserves during the rapid displacement of the flow.” The central bank refrained from commenting. The March crisis eventually lifted interest in Türkiye by resuming interest rates, taking new measures to lower the liquidity in the lira, in addition to increasing the compulsory reserve tariffs on the short -term bank obligations abroad. It also helped with this general improvement in the appetite of investors to the origin of emerging markets, especially to some of the most serious customs duties imposed by US President Donald Trump. Despite the continued decline in the lira in a way against the dollar, the government strives to “real estimate” currency policy, which means that the frequency of a fall should maintain less than the inflation rate. In light of expectations for slowing monthly inflation, the rate of this actual estimate is unable. However, interest trading still earns profits. The revenue of these transactions denied the lira during the highest levels since 2021, which instead of the March losses, according to the Bloomberg index, based monthly on the revivating futures. The accounts of independent Turkish economist Haluk buromgikji estimated the capital flow as a result of these transactions from about April 18 to last week. This type of trade achieves profits for the fifth semester respectively, which is the longest profit range of this type since 2012. But most of these profits are due to very short -term capital flow, known as ‘hot money’, and bet on the lira for periods that often do not exceed one week, according to traders who spoke on the condition of not disclosing their identity. The “Morgan Stanley”, “Deutsche Bank” and Iings recently renewed its recommendations to enter into the interest trade transactions denominated in the lira, while the HSBC Bank recommends the purchase of local effects in the Turkish currency.