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Hear that crunch? That's lira liquidity amid Turkey's F/X flights of fancy

Mar 28, 2019

We Crunch the Numbers, You Make the Trade.We Crunch the Numbers, You Make the Trade.
We Crunch the Numbers, You Make the Trade.We Crunch the Numbers, You Make the Trade.

 

  • Turkey has orchestrated a currency crunch to shore up the lira in recent days
  • Funny enough, there's a presidential election in the coming days, which will test President Recep Tayyip Erdogan's support in the nation.
  • Turkish authorities have leaned on local banks to not give foreigners access to local currencies to bet against the lira
  • This has sent foreigners offshore to the swap market for liquidity

 

  • While swap dealers are ecstatic, ready to order that new Tesla, scrambling foreign investors face swap rates for Turkish lira that passed 1,000% today. 
  • Yes, 1,000%!

 

  • The Turkish 2-year bond yield soared past 20%
  • But the lira has not tanked, so great, right?
  • Well, it is being reported that Turkey has burned through a third of its reserves with its f/x flights of fancy

 

  • Calm today may breed calamity in the near future
  • Turkey needs to roll over USD$177 billion of foreign-currency debt over the next 12 months

 

  • Let's see who's withholding limiting liquidity for who then...

 

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Global Top Stock IdeasTOP LONG & TOP SHORT STOCK IDEAS FOR GLOBAL MARKETSMONTHLY TOP IDEAS FROM OUR MULTI-FACTOR QUANTITATIVE MODELS