Futile lira defence, CEE bond purchases

Turkish policymakers’ efforts to prevent the lira from slipping through 7/$ will prove futile and, with the chances of an IMF deal slim, the government has turned to import compression to counter strains in the balance of payments. If pressure on the lira continues to mount, capital controls may soon follow. Elsewhere, central banks in Central and Eastern Europe have ramped up bond purchases over the past month. Poland’s central bank has acted aggressively – and it appears successfully – but the big challenge will be to keep yields anchored.