Turkey's weak currency means more tourists can afford to travel there, but it doesn’t mean more revenue for the country.
BY ASIA TIMES STAFF
Despite another expected rate hike on Thursday, the lira is struggling to reverse its decline, and president Erdogan is ill-equipped to avert disaster
Investors are dumping the Turkish currency amid worries that a pre-election spending spree and pressure on the Central Bank to keep interest rates low could see the lira continue to spiral.
Turkish President Recep Tayyip Erdogan convened senior members of the government’s economic administration on Wednesday for an urgent meeting to discuss the plunging value of the Turkish lira. The Turkish currency plunged to record lows on Wednesday, dropping drastically against the US dollar. Before the meeting, presidential spokesman Ibrahim Kalin said, “Turkey’s fiscal discipline will be preserved under the leadership of our president.” In a statement following the meeting, Erdogan’s office said “Measures will be taken to more effectively combat inflation and reduce the pressure on interest and exchange rates.” Read More
Though the flight of foreign investors is often cited as the main factor behind the slump of the Turkish lira, official data indicate that growing distrust in the currency stems largely from domestic actors.
BY DAVID P. GOLDMAN
Markets have vastly overreacted to Russia’s problems (sanctions), but Turkey is a different story
BY DAVID P. GOLDMAN
With a majority of corporate debt denominated in foreign currencies, letting the lira find its own value poses systemic risks
(The Guardian) Are brewing exchange rate and debt crises in Argentina and Turkey localised events without broader implications? Or are they early warning signs of deeper fragilities in bloated global debt markets that are being exposed as the US Federal Reserve continues to normalise interest rates?
(Asia Times) What happens next probably is what happened to Greece during its financial collapse — meaning Turkey’s economy could shrink by 10 to 20 percent. There are a lot of political scores to settle in Turkey, and an economic crisis would make Erdogan most vulnerable.