Analysis-After Turkey's giant rate hike, foreign investors mull return

By Nevzat Devranoglu and Karin Strohecker ANKARA/LONDON (Reuters) - Turkey's latest massive interest rate hike has caught the attention of ...

STORY CONTINUES BELOW THESE SALTWIRE VIDEOSBy Nevzat Devranoglu and Karin Strohecker

Turkey's top officials say that they plan to take two more vital steps to reverse a years-long exodus of foreign investment as well: they will publish a comprehensive economic programme next month that will reduce uncertainties; and they will begin holding meetings with investors abroad. Yet five foreign investors told Reuters that this week's rate hike signalled a new independence among policymakers who are serious about addressing unrelenting pressure on the currency and reining in inflation expectations.

"The more proof we get of the return to orthodoxy the more likely we are to revisit these investments," she said.Faced with badly depleted FX reserves and other economic strains, Erdogan, fresh from winning re-election in May, appointed Simsek and picked as central bank governor former Wall Street banker Hafize Gaye Erkan - the first woman to run the central bank - to turn things around.

Though Turkey's international bonds are widely held and form part of key indexes, the country has struggled to lure foreign investors back into its domestic bond markets after a series of lira crises and de facto capital controls. "Ultimately for investors the end rate matters - but it is more that the central bank is ready to act when needed," said Kaan Nazli, portfolio manager at asset manager Neuberger Berman in London."But seeing that change is a positive thing."

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