After the Central Bank’s loan arrangement, Turkey’s risk premium tested over 800 basis points on the first trading day. This figure was recorded as the highest level seen since 29 July.
The CBRT announced on Friday, as it had signaled before, to reduce some commercial loan rates and at the same time to limit the growth of these loans.
Testing 18.15 after the rate cut decision last week, Dollar/TRY started the week under pressure above 18.
Dollar/TL is traded around 18.12 today. Euro/TL finds buyers at 18.13.
According to this level, TL dollar The depreciation against it has been 18 percent since April and 27 percent since the beginning of the year. Compared to last year, the loss exceeded 40 percent.
While Turkey’s credit risk premium recorded its highest level with 900 basis points in mid-July, it had bottomed with 650 basis points on 11 August.
Markets will follow President Recep Tayyip Erdogan’s messages after the cabinet meeting.
Bond yields fell sharply
In the first trading day after the decision, a rapid retracement was observed in bond yields.
The 2-year bond yield fell to 14.02 percent from 17.62 percent in the last transaction on Friday. Thus, the 2-year benchmark bond yield fell by 360 basis points.
The 10-year bond yield also fell from 16.93 percent to 14.19 percent. Thus, the 10-year benchmark bond yield fell by 274 basis points.
Commercial loan rates expected to fall
The CBRT announced the macroprudential measures for the credit transmission mechanism, which it signaled with the interest rate cut, after the market closure on Friday.
Before the CBRT’s decision, the cost of commercial loans in areas such as net exports was close to single digits, other commercial loans were close to 40 percent, and individual loans were close to 50 percent. After the decision, commercial loan interest rates are expected to decrease by 40 percent.
According to bankers’ calculations, no steps were taken, except for the policy rate cut for loans close to single digits. 40 percent in other commercial loans. interest The rate will decrease significantly, and if it is not lowered, it has become obligatory to hold bonds in return.
However, the fact that this loan growth was limited to 10 percent from the end of July until the end of the year was actually a significant “limitation” since it would be “easy to overcome” in an inflation environment approaching 80 percent. No significant step was observed for retail loans, which hovered around 50 percent.
Speaking to Reuters, a senior banker said, “There have been steps in loans that will reduce commercial loan rates outside the areas that the government wants, as well as limit the growth of these loans. Even if banks do everything the CBRT wants, which they cannot do all, they will still have to hold bonds. The CBRT has further increased its control over the loans and bond market.
Source: Reuters, Bloomberg