Türkiye Needs Further Rate Hikes to Lure Bond Investors

Türkiye’s central bank needs to raise interest rates further from the current 15 percent to lure investors back into the bond market, wrote Kutman, a Turkish market expert at KNG Securities.
Rates need to be closer to 40% inflation to lure investors back, he said.
Türkiye’s June rate hike of 6.5% had minimal impact on the bond market, with the spread on Türkiye’s five-year credit default swap falling to just 490 basis points from 510 basis points, Kurtman wrote.
Turkish President Recep Tayyip Erdogan still hasn’t explicitly accepted the need for such high rates, especially with local elections looming next March, continuing to rattle investors.