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IMF Turkey director: CDSs a source of risk for Turkey

February 5, 2014

ISTANBUL (CIHAN)- The International Monetary Fund's (IMF) senior representative in Turkey , Mark Lewis , has said Turkey seems to be risky in terms of its credit default swaps (CDSs) and that Ukraine should also be assessed in the same risk category. Within the last month, five-year Turkish CDSs rose by as much as 50 basis points from about 220 basis points to 274.5 in late January. They were at 257.83 points as of 1 p.m. on Wednesday . A CDS is a financial swap instrument that the seller pledges to compensate the buyer in the event of a loan default. Speaking on a TV program on Bloomberg HT on Wednesday, Lewis shared his opinions on the Turkish economy. He said the IMF would update its inflation expectations for Turkey by end-March but that the fund is currently not very optimistic. He also noted that the narrowing gap between the growth rates of developed and emerging economies is seen as a problem. Developing countries, including Turkey , have seen their economies grow beyond the world average, especially when advanced economies were struggling with the effects of a global economic crisis. But the picture has currently been turned upside down as global capital movements have shifted back to developed economies, which have turned their troubles around and gotten back on the right track. Lewis also commented on the Turkish Central Bank's decision on Jan. 29 to increase interest rates, saying the bank's step was a belated decision but was in the right direction. After resisting calls from the markets for many months, the central bank eventually moved to dramatically increase rates by an average of 500 basis points, even outstripping the most radical expectations, after which currency rates bounced back from historically high levels. (Cihan/Today's Zaman) CIHAN

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Source: Cihan News Agency (Turkey)

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