Lack of concrete policy changes in Russia-Turkey talks keeps lira muted

The negotiations on the restoration of Russian-Turkish relations began on Tuesday, July 26 at the level of ministries. Relations between Russia and Turkey deteriorated after the incident on November 24, 2015, when a Turkish F-16 fighter jet brought down a Russian Sukhoi Su-24M bomber

At the scheduled ministerial level meeting while both sides announced intention to cooperate, concrete policy changes were lacking. The announcements from the ministerial meetings in Moscow failed to lift the Lira which weakened on Tuesday amidst a general EM risk-off.

Russian Deputy Prime Minister Arkady Dvorkovich announced that 1) The two countries would discuss the lifting of the food import ban, 2) They would review the resumption of the TurkStream gas pipeline, and 3) They would discuss resumption of chartered flights between Russia and Turkey. Nevertheless, the actual policy changes were not made; in fact, the Russian government said that the re-starting of flights will take some time.

USD/TRY was higher on Tuesday, hit highs of 3.0522 and was largely unchanged on the day till now at 3.0410.