Update: TRY Short - Incoming Hyperinflation & Eurobonds Defaults
SUMMARY: Short, economic damage to the Turkish economy is going to be severe; its' citizens will become poorer via wealth destruction and purchasing power erosion.
Turkey is slashing rates in the face of rising inflation – which only developed economies can, while not understanding “transitory”. As the lira collapses against the Dollar, Ankara seems to be sending the signal this FX metric does not matter. If it is wrong, the consequences will be painful: hyperinflation is mentioned in a far from unconnected economy. Yet if it is right, the message for the US ought to be clear: and Turkey is extremely important in geostrategic terms.
Erdogan's obsession with low interest rates will crush the FX rate and make imports unaffordable: such as Oil, Gas, advance intermediaries not made in Turkey.
Also, Erdogan & Turkey has pursue multiple overseas expansionist Foreign Policy campaigns in "all directions" which has drained Turkey's resources. Chances of additional funding/finance life-lines from China and Qatar may not be big enough, or available, to steady the Turkish economy & FX rate.
The other major emerging market in the region is Russia - link below
Oil price (link below) measure both global economic activity and risk.
Turkey is slashing rates in the face of rising inflation – which only developed economies can, while not understanding “transitory”. As the lira collapses against the Dollar, Ankara seems to be sending the signal this FX metric does not matter. If it is wrong, the consequences will be painful: hyperinflation is mentioned in a far from unconnected economy. Yet if it is right, the message for the US ought to be clear: and Turkey is extremely important in geostrategic terms.
Erdogan's obsession with low interest rates will crush the FX rate and make imports unaffordable: such as Oil, Gas, advance intermediaries not made in Turkey.
Also, Erdogan & Turkey has pursue multiple overseas expansionist Foreign Policy campaigns in "all directions" which has drained Turkey's resources. Chances of additional funding/finance life-lines from China and Qatar may not be big enough, or available, to steady the Turkish economy & FX rate.
The other major emerging market in the region is Russia - link below
Oil price (link below) measure both global economic activity and risk.
