​Berat Albayrak is not the only problem TL is facing

TURKEY - In Brief 24 Feb 2021 by Atilla Yesilada

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This morning CBRT was forced to raise required reserve ratios by 200 basis points across the deposit maturity spectrum to defend the TL.As I write these lines, around Istanbul time noon, dollar/TL did not respond to the additional monetary tightening step, which may be because of rumors surfacing in Turkish media that the dreaded Mr. Berat Albayrak may return to the main stage as Energy or Foreign Minister. Yet, it is unfair to pin the entire blame for TL weakness on Mr. Albayrak, because suddenly the sunny skies of Turkey are crowded with storm clouds.Of these; rising US long bond yields is a serious problem, in particular if it is to be accompanied by a stronger Dollar Index. While most analysts are bearish on the US dollar, I don’t share this view. Yet, EM shocks is not my remit, about which I presume all of my audience has more solid ideas, so I move on to more tangible problems. First, the day of reckoning with US is near.Yesterday, Pentagon Spokesperson Mr. John Kirby urged Ankara once again to stop ordering new batches of S-400s and ditch the existing batteries. It must be noted, he was answering a question.Nevertheless, as Biden orders Pentagon to return to Iraq (with NATO) and North East Syria, feathers are seriously ruffled in Turkey. I expect the first serious conversation about solving bi-lateral problems in March some time, which is almost certain to be preceded or to be followed by more currency volatility. At home, Erdogan’s plans to initiate re-opening of the economy is in tatters, as daily Covid-19 cases jumped to 9.1K, a one month high.There were small-scale street demonstrations by the service industry unemployed in six cities; as food retailers, and...