The commotion…

As you may remember, in last Friday’s report, I said, “One of the most unpleasing weeks we’ve been through is finally about to end”. It looks like I got ahead of myself; because, this week was way worse than the last week.

The fact that Trump has created a new trouble to keep the world’s press busy was obviously this most significant development of the week. Thanks to him, leaders who haven’t talked to each other for a very long time, started to spend every waking moment talking on the phone. For instance, President Erdogan spoke to Pope yesterday, after a series of telephone talk with Putin over Jerusalem.

But, what does it all mean? It means that parties conflicting with each other over issues where we don’t exactly tell who’s right or who’s wrong, have reached a consensus about the fact that Trump has made a big mistake. It goes to show that sometimes certain behaviours can be condemned or openly criticised by everyone else, which is very promising indeed. I am sure there are people who say, “I wish America didn’t make this mistake”. I think if it was any other country who took this misstep; it wouldn’t cause so much commotion in the world.

Let’s take a quick look at the situation in Turkey: Everyone expects Central Bank to hike interest rates by 100 bps. The market is already bought and this is the most important reason for the decline in USD/TRY and benchmark rate. If the expectations do not come true, the duo might test a 4.00 level way earlier than expected.

Nevertheless, I think we should not count too much on rate hike to keep the exchange rates calm for long. I see fluctuations ahead for Turkish economy.