Foreign investors say that they are influenced by interest rate cuts and decrease in inflation, and hopes that the start of a regional transformation process in the Middle East can strengthen their positions.
The Central Bank of the Republic of Turkey (CBRT) reduced its policy interest to 45 percent yesterday to 45 percent and continued its loosening cycle in monetary policy last month. The Central Bank had taken aggressive steps to terminate years of price increases and depreciation in TL.
After the re -election of President Tayyip Erdoğan and returning to more Orthodox practices in the economy and monetary policies, Türkiye became the main stop for developing market investors once again.
“Türkiye is one of the great success stories of Turkey, one of the positive dynamics that we like,” Vanguard said.
“In terms of reform and macro story, the situation is very positive and there is still a way to go,” Eisinger said.
According to CBRT data, local bonds recorded the biggest entry of the last two months with a cash inflows of $ 1.24 billion from foreign investors a week ending with January 17th. Thus, the total entrances since the beginning of the year have increased to $ 1.9 billion. For the first time since 2019, foreign investors hold more than 10 percent of government bonds.
Although there is a sharp increase in the state bond rate of foreigners compared to the 1 percent increase in 2022, this rate is less than half of the 25 percent seen before the TL crisis.
The exit process of the crisis, in which TL was depreciated, was painful for Türkiye.
Türkiye had fueled rapid growth in the economy by pursuing unusual financial policies and monetary policies for years. According to Oxford Economics, Turkey has been the most economic growth among the major developing markets since the beginning of the Coronavirus crisis.
But the cost was heavy for those who invest in local bonds. In 2022, exceeding 85 percent and 75 percent last year, inflation and depreciation, which saw the record levels many times due to the record levels of the majority of these investments were deleted.
Disinflation
Amundi, the largest asset manager in Europe, turned to local bonds under the favorable conditions seen.
Syzdykov, the global chairman of Amundi’s global chairman and co -chairman of the fixed return department of developing markets, said, “We like Turkey in terms of local currency.”
According to Syzdykov, the fell in Turkey, which provides very little movement for the continuation of the decline in TL TL, coincides with the same time in favor of investors. In December, inflation was lower than expected to 44.38 percent on an annual basis.
“The speed of disinflation will remain higher than the speed of devaluation, so our expectation is in this direction,” Syzdykov said.
According to the Reuters questionnaire, the Central Bank, which foresees that inflation will fall to 21 percent at the end of the year, is expected to continue interest rate cuts that will attract the interest rate to 30 percent.
According to analysts, the recent developments in the Middle East, such as the overthrow of Bashar al -Assad and the ceasefire between Israel and Hamas in Gaza, may increase the growth momentum in Turkey, although the government’s tendency to pressure for strong growth in the economy is reduced.
“All those who took place in the Middle East is probably very positive for Türkiye,” AXA’s Chairman of the Developing Markets and Asian markets is probably very positive for Turkey.
“Turkey will probably be an actor in the reconstruction of the region and the reconstruction of Ukraine … So there is absolutely positive news about the growth appearance and financial appearance,” he said.
On the other hand, Turkey’s large developed market investors operating in developing markets, in other words, Crossover investors need to prove that Orthodox policies are permanent in order to retreat.
These investors, often managed large amounts of money, have turned to developing economies in recent months, especially to countries with an investment degree in the Gulf or Latin America.
Syzdykov from Amundi said, “From their perspective, it is very risky to enter Turkey in terms of both geopolitical and institutional fragility,” Syzdykov said.