While the new economic management’s steps to ensure price stability were gradually implemented, Turkiye’s 5-year credit risk premium (CDS) fell below 400 basis points despite the ongoing geopolitical risks.
While the Turkish economy’s fight against inflation continues strongly, this situation continues to affect pricing.
After the steps taken, Turkiye’s CDS fell below 400 basis points for the first time since October 13 and stabilized at 398.5 basis points.
While the Central Bank of the Republic of Turkiye (CBRT) increased the policy rate by 500 basis points to 35% in line with expectations last week, it was signaled in the policy text that gradual simplification would continue.
According to the communiqué published in the Official Gazette on the day following the decision, the CBRT introduced steps to increase the share of the Turkish lira (TL) in the banking system, as well as implementation facilities for export credits and companies’ access to credit within the scope of simplification.
“Approximately $7.1 billion of external financing was provided”
On the other hand, it was stated that Treasury and Finance Minister Mehmet Simsek continued to receive positive signals from the meetings with foreign investors.
While Turkiye’s access to external financing continues to increase, Mehmet Simsek, in his speech yesterday at the Plan and Budget Commission of the Turkish Grand National Assembly (TBMM), where the 2024 budget of the Ministry of Treasury and Finance was discussed, said that as of October, approximately $7.1 billion of external financing was provided for project financing.
Simsek stated that, according to the report shared by the Financial Action Task Force (FATF), Turkiye is compatible with 39 of the 40 FATF standards and said, “Within the scope of technical compliance, the only issue whose preparations are ongoing is the work on crypto assets. Our necessary work in this regard has reached the final stage. We are making efforts to remove our country from the gray list with the effectiveness we will provide in practice.”
Inflation report will be announced tomorrow
Analysts stated that both the clear attitude shown in the fight against inflation and the economic management’s meetings with foreign investors weakened the risk perception regarding Turkiye, and said that this situation can be seen in the movement in CDSs.
Analysts stated that the decline in Turkiye’s credit risk premium is promising these days, when the Israeli-Palestinian conflict continues and there is a risk of the war spreading to larger areas, and noted that CBRT President Hafize Gaye Erkan’s guidance in the Inflation Report may also have an impact on the CDS score.
Source: Trthaber / Prepared by Irem Yildiz