Flash: Turkey a sign of pending EM strategy - Danske Bank

FXstreet.com (Barcelona) - Christin Tuxen, Senior Analyst at Danske Bank notes the extent that the Turkish move is a signal that EM central banks are increasingly starting to look to the rate weapon rather than intervention and currency controls - as a tool to stem the inflationary pressure from currency weakening.

Key Quotes

“This is positive in mitigating the risk of unpredictable moves and political
influence.”

“However, market sentiment could easily turn sour again if policy makers are unwilling to accept the growth-challenging cocktail of higher interest rates to stem currency depreciation (and thus inflation), a China that is shifting down a gear, falling commodity prices and a Fed that is becoming increasingly less accommodative.”