Foreign Investors' Strategy in Turkey: Carry Trade Preference and Bond Hesitation

Confidence in Economic Management and Real Appreciation The tight monetary policy implemented in Turkey and the attitude of foreign investors toward Turkish assets remain central to the economic agenda.
Economist Timothy Ash stated that markets are pleased to work with Treasury and Finance Minister Mehmet Şimşek and his team.
Ash noted that the policy of real appreciation of the Turkish lira is seen as a cornerstone of the disinflation process.
The steps taken by the economic management are observed to have found resonance in international markets.
Carry Trade Preference and the Bond Market Timothy Ash mentioned that foreign investors are satisfied with the returns obtained from carry trade transactions, which allow them to benefit from interest rate differentials.
However, he pointed out that they remain reluctant to enter the bond market.
This situation is interpreted as investors focusing primarily on short-term gains.
İris Cibre's Assessment of Risk Avoidance Economist İris Cibre characterized the avoidance of long-term and permanent risk by foreign capital as a significant admission.
Cibre argued that investors fear they would be unable to close their positions in the bond market due to liquidity concerns.
Pointing out that this approach demonstrates the limits of confidence in the Turkish economy, Cibre touched upon the systemic risks inherent in carry trade transactions.
Cibre warned that investors who cannot exit in time during a potential market reversal could face serious financial losses, summarizing the situation with a warning that those who are last to exit will bear the brunt of the risk.
What is Carry Trade?
Carry trade is a financial strategy where investors borrow in a currency with low interest rates and invest those funds in another currency or asset offering higher interest returns, aiming to profit from the difference.