Turkey Central Bank Intervention Halflife 12 Hours As USDTRY Roundtrips

So much for the credibility of the CBRT? After the Lira soared, and the USDTRY plummeted by just under 1000 pips yesterday when the Turkish Central Bank announced its "shock and awe" intervention, it has since pared back virtually all gains, and at last check was just over 2.24 having nearly roundtripped in 12 hours. Why the loss of faith? Two reasons: First, as we pointed out yesterday, suddenly the domestic situation in Turkey takes front stage again, with 4.25% added elements of instability, causing the political instability to soar, leading to an even higher probability of a social and political overhaul. Second, as Goldman pointed out overnight, "the CBRT stated that liquidity "… will be provided primarily from one-week repo rate instead of the marginal funding rate in the forthcoming period". This implies that the effective rate hike is 225bp (to 10.00%; the 1-week repo rate), as the Non-PD lending rate was 7.75% prior to the announcement."

In other words, when looked at on a corridor basis, the CBRT hiked not by a shocking and awing 425 bps but by precisely the predicted 225 bps!

Which means the central bankers merely went along consensus, and not a basis point above it, which is the worst of all worlds - giving the impression of massive tightening (for domestic political purposes), while in reality not doing all that much.

The end result, well - see for yourselves:

Comments

[Max Damage]

To those who bought S&P futures in the After hours last night I believe this well known phrase is appropriate

"And it's gone"

[cnmcdee]

Justin Bieber is quad riding in Panama, let's stick to the more IMPORTANT news...

[williambanzai7]

[cnmcdee]

Meanwhile on the deck of the burning (and sinking) titanic...

[Sudden Debt]

OPTION 2: Try talking it down with meaningless words!

[DeficitAlchemist]

Emerging rate hikes wont save the Lira or tallk of the other emerging Yield chased economies, high on hog of FED QE 'chase & flight capital'.

We called this trade at below 2.0000 for 1400 pips the rest came on shorter time frame set ups.. Next up the HUF, RUB, MXN, ZAR some more, PLN longer run INR (rupee will also get a revisit). for RRR14 trade

http://www.youtube.com/watch?v=taQLL_L-GHI

and here

http://www.youtube.com/watch?v=meU8sr1SxRo

Cost of US printing for the world..

[Sziget]

The forint (HUF) is the main headline at all the hungarian news sites, president of the Hungarian National Bank, ex economy minister talking right now at some conferance. Elections coming up in 2 months. Interesting times we living at -.-

[Rodders75]

Yes. I would say the Hungarians are completely screwed, especially with a vast quantity of SFR mortgages outstanding. Plus Ukraine. Plus all the others. Crash helmets on everyone.

[DeficitAlchemist]

Emerging rate hikes wont save the Lira or tallk of the other emerging Yield chased economies, high on hog of FED QE 'chase & flight capital'.

We called this trade at below 2.0000 for 1400 pips the rest came on shorter time frame set ups.. Next up the HUF, RUB, MXN, ZAR some more, PLN longer run INR (rupee will also get a revisit). for RRR14 trade

http://www.youtube.com/watch?v=taQLL_L-GHI

and here

http://www.youtube.com/watch?v=meU8sr1SxRo

Cost of US printing for the world..

[disabledvet]

it really isn't the Fed's fault.

But of course "this is all about the evil imperialistic dogma."

The irony is that now we know the purpose of the QE...and it had nothing to do with stimulating US growth.

Someone is very angry...and it's not Turkey.

[buzzsaw99]

turkey, iran, gold, oil. everything you need to know about why this is happening to them is contained in those four words.

[q99x2]

Long live Myra

[buzzsaw99]

step 1: destabilize the currency

step 2: revolution

step 3: new puppet regime

[Its Only Rock N Roll]

You don't bring a knife to a gun fight. 

The asswipe from SocGen had it wrong...they STARTED the "domino crisis" in EM with this action.  I hope all of the EM central banks are ready to hike rates dramatically.  

[mijev]

There are some beautiful beach areas in Turkey with some beautiful real estate. If the rate hike also applies to mortgages, I think there will be some beautiful bargains popping up soon, but the social unrest will probably not be so pretty.

[williambanzai7]

Can we use MyRA to purchase a second home?

[fonzannoon]

I just purchased a 1 month CD in Myra from bank of Turkey. it pays 11%

[Its Only Rock N Roll]

Principal to be repaid on an EBT card