Turkish Debt And Equities: Looking Good

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Risk appetite is back with us. The Turkish lira is looking solid amid the still high carry. With the lira 3-month money market rate 1344bps higher than the US$ 3-month LIBOR and 1578bps above euro 3-month money, the interest rate differential alone is a very compelling reason for holding the unit. Interest rates could still head up further given that CPI still remains high, having posted a 10.55% y-o-y rise in September. Now at TRY1.4575/US$, the key upside level is TRY1.4300/US$. At the same time, the Hungarian forint is back on the march, and looks to be heading to HUF260.00/EUR.