Group 1 - Turkish policymakers are taking action to curb the inflow of "hot money" into the lira market, responding to one of the most profitable currency arbitrage trades globally [1] - The Central Bank of Turkey has been strictly controlling the lira market while allowing gradual depreciation of the currency, leading to increased unpredictability in market fluctuations [1][2] - The recent acceleration of lira depreciation on Fridays has negatively impacted a popular short-term trading strategy, where investors buy lira overnight on Thursdays to earn weekend interest [1] Group 2 - With the Central Bank's interest rates near 50%, Turkey has become a hotspot for arbitrage traders who borrow from low-interest countries to invest in high-interest assets [2] - Turkish officials are attempting to prevent short-term arbitrage trades due to concerns that rapid capital withdrawal could lead to significant market volatility [2] - The lira's depreciation against the dollar continues, but the Turkish government is implementing a "real appreciation" policy, aiming to keep currency depreciation below consumer inflation rates [2] Group 3 - Bloomberg reports that the return on lira arbitrage trading reached its highest level since 2021 in May, compensating for losses incurred in March [6] - Approximately $3.4 billion has flowed into arbitrage trades from April 18 to the previous week, with traders experiencing five consecutive quarters of profitability [6] - Major financial institutions like Morgan Stanley, Deutsche Bank, and ING have reiterated their bullish stance on lira arbitrage trading, while HSBC advocates for buying long-term local currency bonds [6]