Interest rate high enough to lure foreigners: Bank executive

ISTANBUL

The current level of interest rates is high enough to lure foreign investors, says Hakan Aran, the general manager of private lender İşbank, adding that the Central Bank may post another rate hike.

The Central Bank last week lifted the policy rate from 40 percent to 42.5 percent, which marked the seventh hike since June.

The Central Bank may increase the policy rate once again by 250 basis points, but still the current yield of two and five-year government bonds is attractive to foreign investors, according to Aran.

“I think, the interest rate at 42.5 percent is ideal to lure foreigners. I am optimistic about the future of finance,” Aran said at an event in Istanbul.

“This is a period when we need to strike a balance between the production and the real sector considering the ongoing monetary tightening and quantitative tightening. We have reached a point where we should be careful about access to financing.”

Foreigners keep buying Turkish equities and government bonds, the data from the Central Bank showed.

Non-residents’ net equity transactions amounted to $396 million in the week ending Dec. 15, declining from $562 million in the previous week.

Foreigners’ outright purchase of government bonds was $181 million.

The market value of equities held by non-residents stood at $31.3 billion as of Dec. 15, the Central Bank’s weekly data showed. 

Meanwhile, President Recep Tayyip Erdoğan has appointed Professor Fatma Özkul as a member of the Monetary Policy Committee (MPC).

Özkul is a lecturer at Marmara University with an academic focus on accounting and crypto assets.