Indonesian economists said on Friday that Turkey’s move to raise its one-week repo rate can be an opportunity for the country to attract foreign investors, particularly in portfolio investment.

Ibrahim Assuaibi, director of the forex brokerage TRFX Garuda Berjangka, viewed the move as Turkey’s strategy to attract fresh funds from the stimulus provided by central banks around the world amid the current global economic crunch.

Assuaibi pointed out that the US Federal Reserve poured out trillions of dollars in stimulus funds, as did the European and British central banks.

“Turkey is looking to take advantage of those moves by issuing bonds with high interest in order to attract foreign investors,” he said, adding that the funds can help reduce the country’s budget deficit.

“What Turkey has done by raising interest rates is normal, although many have questioned the decision. Turkey still has substantial gold reserves,” he told Anadolu Agency.

‘Little impact on Indonesia’

Telisa Falianty, an economist from the University of Indonesia, said Turkey’s move is likely to have a spillover effect on the economies of other countries, as was the case in 2018.

“During the 2018 crisis, we saw there was an impact on the Indonesian economy, although small, especially on exchange rate stability,” she said.

She noted that investors often group Indonesia and Turkey in the same category due to their similar economic characteristics, as both are developing countries with similar credit ratings and GDP.

Turkey's Central Bank on Thursday increased its one-week repo rate – also known as the bank’s policy rate – from 10.25% to 15%, tightening its monetary policy to ensure price stability.

The decision was announced in a statement following the bank’s first policy meeting under its new governor Naci Agbal, who was appointed on Nov. 7./aa