In recent financial insights, Deutsche Bank has issued a note cautioning against re-entering the Turkish bond market at this juncture, citing ongoing repricing and recent robust interest rate hikes as factors contributing to the cautious stance.
The note stressed that there are still a few months to return to a little more optimism structurally and that Turkish local bonds are believed to be among the best-performing emerging local bond markets in 2024.
In the information note, it was emphasized that Turkiye’s growth forecast was raised to 4 percent since growth in the second quarter exceeded expectations and budget deficit projections were also higher than anticipated.
With this, it was noted that inflation paused at 61 percent due to the softening in domestic demand, the downward trend in inflation, and the stability in exchange rates, and it was predicted that inflationary pressures would continue in the following months and inflation could be around 69 percent at the end of the year.
Moreover, it was stated that the depreciation in the Turkish lira, the rise in oil prices, the persistence of services inflation, and the rise in inflation expectations increased the upside risks to inflation.
Deutsche Bank pointed out that the Central Bank of Turkiye's higher-than-expected decisions in monetary tightening, the new practices in the macroprudential framework that started to be implemented by emphasizing Turkish lira deposits vulnerable to protection and the transparent communication of the bank included a surprise positive for the Turkish lira.
Source: Anadolu Agency