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Turkey Central Bank Intervention Halflife 12 Hours As USDTRY Roundtrips

Tyler Durden's picture





 

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:

 


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Wed, 01/29/2014 - 08:03 | Link to Comment Max Damage
Max Damage's picture

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"

Wed, 01/29/2014 - 08:02 | Link to Comment cnmcdee
cnmcdee's picture

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

Wed, 01/29/2014 - 08:05 | Link to Comment williambanzai7
williambanzai7's picture

THE CRISIS IS OVER

Wed, 01/29/2014 - 08:04 | Link to Comment cnmcdee
cnmcdee's picture

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

Wed, 01/29/2014 - 08:05 | Link to Comment Sudden Debt
Sudden Debt's picture

OPTION 2: Try talking it down with meaningless words!

Wed, 01/29/2014 - 08:07 | Link to Comment DeficitAlchemist
DeficitAlchemist's picture

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..

Wed, 01/29/2014 - 08:13 | Link to Comment Sziget
Sziget's picture

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 -.-

Wed, 01/29/2014 - 08:18 | Link to Comment Rodders75
Rodders75's picture

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.

Wed, 01/29/2014 - 08:05 | Link to Comment DeficitAlchemist
DeficitAlchemist's picture

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..

Wed, 01/29/2014 - 08:55 | Link to Comment disabledvet
disabledvet's picture

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.

Wed, 01/29/2014 - 08:11 | Link to Comment buzzsaw99
buzzsaw99's picture

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

Wed, 01/29/2014 - 08:17 | Link to Comment q99x2
q99x2's picture

Long live Myra

Wed, 01/29/2014 - 08:19 | Link to Comment buzzsaw99
buzzsaw99's picture

step 1: destabilize the currency

step 2: revolution

step 3: new puppet regime

Wed, 01/29/2014 - 08:26 | Link to Comment Its Only Rock N Roll
Its Only Rock N Roll's picture

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.  

Wed, 01/29/2014 - 08:25 | Link to Comment mijev
mijev's picture

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.

Wed, 01/29/2014 - 08:32 | Link to Comment williambanzai7
williambanzai7's picture

Can we use MyRA to purchase a second home?

Wed, 01/29/2014 - 08:39 | Link to Comment fonzannoon
fonzannoon's picture

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

Wed, 01/29/2014 - 09:53 | Link to Comment Its Only Rock N Roll
Its Only Rock N Roll's picture

Principal to be repaid on an EBT card

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