Turkish central bank has taken new steps to improve its communication with the markets. On Friday, the CBRT said that it would indicate in advance the amount of funding it intends to provide via the one-week repo auction. Today, the central bank said that it will also provide more info on the FX selling auctions. The CBRT now announces 2 days in advance the maximum amount it may sell at auctions. We know for instance that the CBRT may sell up to $100mn at Nov 29-30 auctions (it finally announced 50mn for today).
A good communication is obviously a crucial subject for a central bank as it ultimately ensures the macro and financial stability. However, excessive communication may sometimes be counter-productive. A better communication on the repo auctions may be justified but we are sceptical when it comes to the FX auctions. In the current very uncertain global context and a TRY under selling pressure, showing its hand to the market may not be the best strategy…
Last thought…have you noticed that the CBRT wants to restore predictability, while it has deliberately created uncertainty and volatility in recent months?
HSBC Global Research