Top economy officials are due to present Türkiye's policy vision in closely watched meetings with investors in the United States this week, encouraged by growing foreign interest after the country reversed years of loose monetary policy after the May elections.
The inaugural "Investor Day," hosted by the Central Bank of the Republic of Türkiye (CBRT) in New York on Thursday, will feature presentations on monetary policy, financial markets and banking, along with interactive question-and-answer sessions.
Hafize Gaye Erkan, the governor of the CBRT, is expected to deliver a full day of presentations to investors on monetary policy, inflation and Turkish assets.
According to an invitation the central bank sent to investors, she will feature in four of the five sessions planned for the gathering at the headquarters of Wall Street bank JPMorgan.
Due to prior commitments in Ankara, Treasury and Finance Minister Mehmet Şimşek will virtually participate in the meetings, Bloomberg reported on Tuesday.
He is expected to give a presentation on fiscal policy and the financing outlook.
The event is expected to be attended by over 200 high-level executives from the world's largest investment funds and financial institutions, including JPMorgan, Fidelity, Artisan, Goldman Sachs, Pimco, Vanguard, Blackrock, UBS and Morgan Stanley.
The meeting, to be attended by Erkan's deputies and CBRT's unit managers, will feature sessions on the disinflation path, foreign exchange reserves strategy, banking sector and macroprudential framework.
Policy reversal
Interest in Turkish assets from abroad hit a six-year high in December as Türkiye embraced more conventional policymaking after President Recep Tayyip Erdoğan appointed a new team of technocrats following his reelection in May.
The team is led by Şimşek, a former Merrill Lynch banker who returned as finance minister, a post he held until 2018, and Erkan, a former U.S.-based bank executive. The policy shift aims to arrest inflation, reduce trade deficits, boost foreign investment, rebuild foreign exchange reserves and stabilize the Turkish lira.
Erkan has spearheaded seven consecutive interest rate hikes totaling 3,400 basis points through December to tame inflation, which neared 65% last month.
But the bank has signaled that the aggressive rate hikes – which took borrowing costs from 8.5% to the current 42.5% – could soon end. Still, it pledged to maintain tight monetary policy as long as needed.
Şimşek said he expects lower inflation and economic growth this year and a global transition to looser monetary policy. He said inflation is high but in line with Türkiye's medium-term program. The government sees it entering a steep downward trend as of the second half of the year.
Erkan, the first woman to lead Türkiye's central bank, will take questions, discuss policy and the inflation outlook, and moderate a panel on "investors view on Turkish assets," according to the invitation.
Interest primed to grow
The officials are heading to the U.S. encouraged by the fact that Türkiye's credit default swaps (CDS), a key risk measure, plunged to less than half of levels in May and central bank reserves recently hit a record of over $145 billion.
Amid the improving international sentiment, Türkiye's five-year CDS fell below the 300 mark in December for the first time since March 2021.
Last week, U.S. investment giants Pimco and Vanguard said they bought local Turkish assets recently, betting that the country will maintain high interest rates.
Remarks by top money managers at the companies show that two of the world's biggest investors, which together oversee nearly $10 trillion in assets, have grown constructive on Türkiye after the policy pivot.
The foreign interest is primed to grow, drawn by potentially outsized bond returns. Amundi, Europe's largest asset manager, has also taken a more bullish position on Turkish assets, Reuters reported.
Wall Street bank JPMorgan said Türkiye's lira was a key emerging market bet for 2024, while UBS recommended clients take a "tactical long" position on the currency in November.