Bank of America Corp. strategists announced that they are considering opening a long position in the Turkish lira or purchasing 10-year local bonds. In a note released Thursday, strategists said these steps are worth taking if all four criteria are met.
First criterionThe average cost of funding, which is currently around 8.9 percent, should be increased to at least 40 percent to ensure that domestic demand weakens enough to stabilize the current account balance at a sustainable level.
Second criterion As a result, it was stated that the USD/TL rate should be above the 25 level.
Third criterionIt was determined as the removal of restrictions on institutions’ dollar purchases and interventions in the foreign exchange market.
Fourth The benchmark emphasized that the global dollar outlook should not be upwards.
Bank of America strategists noted that bond markets generally priced “good news” and that there is still potential on the long side of the dollar-denominated bond yield curve.
“We think there is still an area to consider in the long run if the prospects remain optimistic and the policies put forward are expected to be in line with orthodoxy,” the strategists said.
For the rest of the article, BofA Considers Putting TL Back on Its Radar