Wednesday, October 28, 2009

EconNews Roundup

Turkey scores poorly in the World Economic Forum Global Gender gap index, but mainly because there are no women in politics. I agree with the article, but having skimmed the report, I see that the country has fared poorly in other components of the index as well; it is just that politics is the one we are at rock bottom.

I always thought that journalists could make interesting stories out of flow data; the FT just loves EPFT, which publishes global fund flows, but their Turkish colleagues rarely pay attention to bond and equity flows data. So even though I would be careful before making the Brazil link, as correlation is not causation, I still like the piece on the return of the foreign investor.

No disaster without the IMF, says Finansbank Deputy Director Saruhan Dogan: I agree, as I stated clearly a couple of weeks ago. But it is not given that next year, interest rates will stay low while liquidity will be in abundance and Turkish Lira maturity terms will extend. If anything there will be tremendous upward pressure on rates, as the CBT starts hiking. I am not sure on liquidity, but some of the saturated demand for bonds will be channeled to credit, and the CBT is ready to intervene if liquidity gets too tight (look for OMOs in excess of TRY 20bn or so for that). As for lira maturity, it is already extending, but I doubt it will reach the levels to comfort markets.

Fitch follows Moody's with an outlook upgrade; a rating upgrade is on the way as well. Contrary to conventional wisdom, I do not think that Turkey deserves 2-3 notches of an upgrade; a one notch adjustment should brng to Turkey where it should be. Part of my objection is related to my view of debt, which I will refer to in a later post.

CBT lowers its inflation forecasts, albeit only marginally for 2010- 2011 stays the same.

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