Global Investing

Brazil going Turkey? Not quite

February 13, 2012

Could Brazil be on the cusp of  adopting a Turkish-style monetary policy,  J.P. Morgan analysts ask.

Melancholia, social class and GDP forecasts in Turkey

February 6, 2012

An interesting take on GDP stats and those who make the predictions. An analysis of economic growth forecasts for several emerging markets over 2006-2010 has led Renaissance Capital economist Mert Yildiz to conclude that analysts of Turkish origin (and he is one) tend to be: 

Can Turkey confound the pessimists again? The numbers say no

February 3, 2012

Doomsayers have been prophesying Turkey’s economic boom to deflate into bust for many months now. The recent revival in positive investor sentiment worldwide ar has helped silence some voices. Others say it is a matter of time. 

Emerging markets facing current account pain

January 26, 2012

Emerging markets may yet pay dearly for the sins of their richer cousins. While recent financial crises have been rooted in the United States and euro zone, analysts at Credit Agricole are questioning whether a full-fledged emerging markets crisis could be on the horizon, the first since the series of crashes from Argentina to Turkey over a decade ago. The concern stems from the worsening balance of payments picture across the developing world and the need to plug big  funding shortfalls.

Developing vs developed. Ratings convergence goes on

November 24, 2011

Watchers of ratings agencies might be wondering if a golden period of steady credit upgrades for emerging economies is coming to an end. This week brought a ratings downgrade for Egypt and an outlook cut for Turkey. Hungary is teetering on the brink of having its rating cut to junk. Across the emerging world, countries are struggling with weaker growth, still-high inflation and falling investment. Debt ratios are rising.  All this could bode ill for sovereign credit ratings.

Turkish central bank reaps what it sows

November 3, 2011

Turkey’s inflation spike is here. And it is looking worse than expected.

Data today shows October inflation jumping 3.27 percent,  well above forecast and the highest in nine years. Compare that to 1.8 percent at this time last year. Annual inflation is now running at 7.7 percent and makes the central bank’s end-year forecast of 8.3 percent look optimistic –most analysts reckon it will be closer to 10 percent. Inflation has in fact been rising steadily in recent months — a consequence of the runaway credit boom of the past year and a policy experiment which saw the central bank cutting interest rates in the face of an overheating economy and raising banks’ reserve ratios instead.  Add in the pass-through from the lira’s big depreciation since August and a jump in  inflation is hardly surprising. The central bank has of late expressed some concern about inflation and used this to justify its actions to prop up the lira.

Interest rates rise in Kenya, Uganda. Hungary next

November 2, 2011

Recent weeks have witnessed an interesting  split between countries that are raising interest rates to fend off runs on their currencies, and those cutting rates to spur on growth — check out my colleague Carolyn Cohn’s recent piece on this topic (http://tinyurl.com/4x58ny6) .The frontier economies of Africa fall into the first category — Kenya this week jacked up rates by an unprecedented 550 basis points to ward off a currency collapse, while Uganda’s benchmark rate was increased by 300 bps.  

Is end-game approaching for Turkey’s policy experiment?

October 24, 2011

In less than two months, Turkey will mark the first anniversary of the start of an unusual monetary policy experiment, and it may well do so by calling it off.  The experiment hinged on cutting interest rates while raising banks’ reserve ratio requirements, and as recently as August, the central bank was hoping  it would be able to slow a local credit boom a bit but still protect exports by keeping the currency cheap.  Instead, an investor exodus from emerging markets has put the lira to the sword, fuelling at one point a 20 percent collapse in its value against the dollar.  That has forced the central bank to roll back some of the reserve ratio hikes and last week it jacked up overnight lending rates in an attempt to boost the currency. It has also sold vast quantities of dollars and is promising  to unveil more  measures on Wednesday.

Turkey’s central bank: still a slippery customer

October 20, 2011

The Turkish central bank has done it again, wrong-footing monetary policy predictions with its latest interest rate moves.