Following the dismissal of the Turkish Central Bank (CBRT) governor Murat Uysal on November 6, and the unexpected resignation of finance minister (and President Erdogan son-in-law) Berat Albayrak on Sunday November 8, the subsequent nomination of Lütfi Elvan and Naci Agbal as the new Finance Minister and CBRT governor respectively points towards a possible change in the Turkish economic policy path.

Perceived as good news for markets, with prospects of a return to a more conventional policy, the TRY strengthened by nearly 10% against the USD in the past week, down from its historical low of 8.52 to 7.7 as of today, while 5Y CDS eased to their lowest level in months from 523 to 405 as of today.



After having kept unchanged its one-week repo key rate at 10.25% in the last two MPCs, we expect the CBRT first MP committee under Agbal’s direction will agree on the rise its benchmark rate by a considerable 400-450bps to 14.75% tomorrow (November 19), to align it with its Late Liquidity Window lending rate. We believe there is space left to see further rate hikes in coming months.

Inflationary pressures remain well in place. Fed by the TRY depreciation pass-through effect, global CPI stood at 11.9% in October (vs. official objective of 5%).



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Published By: Atilla Yeşilada

GlobalSource Partners’ Turkey Country Analyst Atilla Yesilada is the country’s leading political analyst and commentator. He is known throughout the finance and political science world for his thorough and outspoken coverage of Turkey’s political and financial developments. In addition to his extensive writing schedule, he is often called upon to provide his political expertise on major radio and television channels. Based in Istanbul, Atilla is co-founder of the information platform Istanbul Analytics and is one of GlobalSource’s local partners in Turkey. In addition to his consulting work and speaking engagements throughout the US, Europe and the Middle East, he writes regular columns for Turkey’s leading financial websites VATAN and and has contributed to the financial daily Referans and the liberal daily Radikal.