Good News vs. Bad News

A bumpy start to the week… After a sudden fall on Monday, USD/TRY began climbing up again yesterday, luckily, avoiding jumps that might bring terrible impact on the market. Now, let’s take another look at the details:

The situation of a certain bank, a member of a syndicate that jointly provide loans, has been hanging by a thread for quite some time now. But the good news was that this whole situation would be solved by Thursday. On the other hand, there were rumours that a press statement on “the Chinese investors may start buying assets” could be released any time. However, no one is making any move yet.

I figure that Turkish business world has high expectations of President Erdogan’s US and Germany visits. In the meantime, there are rumours that pastor Brunson who is currently under house arrest in Turkey may be released on October 13th. As far as I can see, these rumours brought pretty positive impacts on markets. This would definitely strengthen Trump’s hand in November elections, if, of course, the rumours turn out to be true. I can’t quite wrap my head around how and why Turkey would possibly release the pastor without seeing its demands are fulfilled. I guess we will have to just wait and see.

The bad news is that hard days might be ahead for Non-Bank Financial Institutions who have been trying to diversify across debt instruments and fund compositions. The sector is sadly expected to face challenges over the forthcoming period in terms of creating funds while many firms will have no other option but to shrink their balance sheets. This is quite a negative development indeed for the trade and real sector, especially in a period where interest rates are wildly rising while the borrowers are having more and more difficulty getting their bank loans approved. Urgent measures might need to be taken before expectations get more deteriorated.

“Oil Price Situation…Is it good sign or bad sign?”

Despite Russia’s statement that they are ready to raise oil output, the Oil Prices keep going up and currently trading above $80 a barrel, which is good for the OPEC member countries, but pretty bad for countries like Turkey, running large current account deficits. Oil price per barrel needs to be $92 so that OPEC member countries can close their budget deficits. But, a little reminder for you, oil price per barrel was $30 in 2016. OPEC member countries had incurred severe losses when oil prices hit $108 per barrel in 2013. And the US efforts to reduce America’s dependence on imported oil had caused great instability.

But on the bright side, pessimism sweeping the oil markets may be reduced if Middle Eastern countries, to which Turkey sells Goods and Services, keep increasing their revenue streams. Under the circumstances, it is crucial for such countries to improve their economies since we are currently depending on them in terms of being provided with funds.

As a matter of fact, many details, that seemed to be negative at the time, might turn into something positive over the medium-term as long as we avoid being panicked into hasty reactions.