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31 Mar 2014
EMEA EM Express: Turkey PM consolidates rule after local election victory
FXStreet (Łódź) - Turkish local elections, held over the weekend, resulted in a victory for PM Recep Tayyip Erdogan, whose ruling Justice and Development Party, or AKP, scooped 45% of the votes.
The prime minister has been under pressure since last year's outbreak of anti-government protests in Istambul and he is also the subject of a corruption investigation. In recent weeks he ordered a Twitter and YouTube blockade, as he suggested the social media were used by his enemies to spread false incriminating evidence against him.
The Turkish lira suffered due to the political turmoil, weakening to a record low in January, while stocks saw losses of around 8.6% since the end of 2013. Following the announcement of PM Erdogan party's victory the stocks rallied and the lira rose 1.9% to 2.1497 against the dollar on Monday afternoon.
On Friday Romania's central bank, NBR, maintained its benchmark interest rate unchanged at 3.5%, after a rate-cutting cycle which begun in July last year at 5.25%. The expected RRR reduction, hinted at in January, has been postponed.
According to Vlad Musclau from ING “The lack of expected response from the NBR makes the RON likely to firm further, but if it moves clearly beyond 4.45/EUR we believe the NBR might try to pick up some of the FX reserves used to aid the RON during the past months.”
Economic data
Turkish GDP surprised to the upside in Q4, growing by 4.4% on an annual basis, compared to forecasts of a 4.0% increase. This is up from 4.3% seen in Q3. According to trade balance data released by TurkStat on Monday
Turkey’s Finance Minister Mehmet Simsek said in a statement following the release of the numbers that “reduced political risks with municipal election results will support domestic demand and 2014 growth outlook.”
Also released on Monday by the Turkish Statistical Institute was trade balance data showing that the trade deficit narrowed to USD -5.1B in February from USD -6.8B in January and more than expected (-6.78B).
Jacqui Douglas, Senior Global Strategist at TD Securities comments: “This figure may have been boosted by the steep depreciation of the lira through Dec-Jan, with the details of the report showing a big 4.5% M/M in exports and a –2.9% M/M decline in imports (both seasonally adjusted).”
In South Africa the trade deficit of ZAR 17.10B recorded in January shifted to a surplus of ZAR 1.72B in February, above expectations of a 1.00B surplus and due to the weakening of the rand, which boosted exports and decreased imports.
South African M3 Money Supply rose 5.93% year-on-year in February, down from 6.41% in January. Private sector credit increased 8.67%, following +8.16%.
Hungary's Current Account surplus widened to a record of 2.9 billion euro in 2013, compared with 829 million euro the previous year. On a quarterly basis the surplus was at 637 million euro in Q4, down from 1.064 billion euro in Q3. HUF strengthened to 307.20 against the euro following the release.
The Hungarian Producer Price Index grew 0.2% year-on-year I February, compared with the 0.1% drop in January.
Technicals
The Turkish lira rallied following the announcement of Turkish PM Erdogan's victory in local elections on Monday. At the Friday close USD/TRY stood at 2.1599.
The daily USD/TRY FXStreet Trend Index was strongly bearish, and the OB/OS Index neutral. RSI was neutral at 43.6164 at the last close. Daily 2-StDev Volatility Bandwidth was expanding at 185 pips, with ATR (14) expanding at 261 pips. The 1D 200 SMA was at 2.0642, while the 1D 20 EMA at 2.2134 .
On Friday USD/ZAR fell to 10.5684. The daily USD/ZAR FXStreet Trend Index was slightly bearish with the OB/OS Index oversold. RSI was neutral at 39.0126 at the last close. Daily 2-StDev Volatility Bandwidth was expanding at 976 pips, with ATR (14) shrinking at 1343 pips. The 1D 200 SMA was at 10.3225, while the 1D 20 EMA at 10.7616.
The prime minister has been under pressure since last year's outbreak of anti-government protests in Istambul and he is also the subject of a corruption investigation. In recent weeks he ordered a Twitter and YouTube blockade, as he suggested the social media were used by his enemies to spread false incriminating evidence against him.
The Turkish lira suffered due to the political turmoil, weakening to a record low in January, while stocks saw losses of around 8.6% since the end of 2013. Following the announcement of PM Erdogan party's victory the stocks rallied and the lira rose 1.9% to 2.1497 against the dollar on Monday afternoon.
On Friday Romania's central bank, NBR, maintained its benchmark interest rate unchanged at 3.5%, after a rate-cutting cycle which begun in July last year at 5.25%. The expected RRR reduction, hinted at in January, has been postponed.
According to Vlad Musclau from ING “The lack of expected response from the NBR makes the RON likely to firm further, but if it moves clearly beyond 4.45/EUR we believe the NBR might try to pick up some of the FX reserves used to aid the RON during the past months.”
Economic data
Turkish GDP surprised to the upside in Q4, growing by 4.4% on an annual basis, compared to forecasts of a 4.0% increase. This is up from 4.3% seen in Q3. According to trade balance data released by TurkStat on Monday
Turkey’s Finance Minister Mehmet Simsek said in a statement following the release of the numbers that “reduced political risks with municipal election results will support domestic demand and 2014 growth outlook.”
Also released on Monday by the Turkish Statistical Institute was trade balance data showing that the trade deficit narrowed to USD -5.1B in February from USD -6.8B in January and more than expected (-6.78B).
Jacqui Douglas, Senior Global Strategist at TD Securities comments: “This figure may have been boosted by the steep depreciation of the lira through Dec-Jan, with the details of the report showing a big 4.5% M/M in exports and a –2.9% M/M decline in imports (both seasonally adjusted).”
In South Africa the trade deficit of ZAR 17.10B recorded in January shifted to a surplus of ZAR 1.72B in February, above expectations of a 1.00B surplus and due to the weakening of the rand, which boosted exports and decreased imports.
South African M3 Money Supply rose 5.93% year-on-year in February, down from 6.41% in January. Private sector credit increased 8.67%, following +8.16%.
Hungary's Current Account surplus widened to a record of 2.9 billion euro in 2013, compared with 829 million euro the previous year. On a quarterly basis the surplus was at 637 million euro in Q4, down from 1.064 billion euro in Q3. HUF strengthened to 307.20 against the euro following the release.
The Hungarian Producer Price Index grew 0.2% year-on-year I February, compared with the 0.1% drop in January.
Technicals
The Turkish lira rallied following the announcement of Turkish PM Erdogan's victory in local elections on Monday. At the Friday close USD/TRY stood at 2.1599.
The daily USD/TRY FXStreet Trend Index was strongly bearish, and the OB/OS Index neutral. RSI was neutral at 43.6164 at the last close. Daily 2-StDev Volatility Bandwidth was expanding at 185 pips, with ATR (14) expanding at 261 pips. The 1D 200 SMA was at 2.0642, while the 1D 20 EMA at 2.2134 .
On Friday USD/ZAR fell to 10.5684. The daily USD/ZAR FXStreet Trend Index was slightly bearish with the OB/OS Index oversold. RSI was neutral at 39.0126 at the last close. Daily 2-StDev Volatility Bandwidth was expanding at 976 pips, with ATR (14) shrinking at 1343 pips. The 1D 200 SMA was at 10.3225, while the 1D 20 EMA at 10.7616.