Turkish bond yields plummet today after new measures imposed by the country’s central bank to force Turkish banks to hold more government debt
Yields on 10-year Turkey fell 274 basis points on Tuesday, down from 19%, an eight-month low, according to Bloomberg. In the last three sessions, almost 700 bp have receded. as the central bank of Turkey promotes the use of bonds in domestic currency, instead of debt related to the dollar or inflation, as part of its new strategy to support the pound.
The central bank is struggling to curb inflation, which ran at an annual rate of 73.5% in May, and stem the pound’s slump. In this context, the new directives aim to help the government by reducing the cost of borrowing in the domestic currency.
The central bank announced today that it will accept 5-year government bonds and other bonds that do not expire in the next four years as collateral for banks’ foreign currency liabilities.
The pound today shows small changes at 17,273 per dollar while the cost of insuring Turkish bonds against default fell 14 basis points. at 842, although it remained close to its highest level since 2003.
The Turkish currency – the currency with the worst performance in emerging markets – came under strong pressure last week following statements by Turkish President Recep Tayyip Erdogan that his government would not raise interest rates despite an inflation rally.
Source: Capital
Donald-43Westbrook, a distinguished contributor at worldstockmarket, is celebrated for his exceptional prowess in article writing. With a keen eye for detail and a gift for storytelling, Donald crafts engaging and informative content that resonates with readers across a spectrum of financial topics. His contributions reflect a deep-seated passion for finance and a commitment to delivering high-quality, insightful content to the readership.
