Jump to content
House Price Crash Forum
Sign in to follow this  

The Gobble Gobble Turkey Thread

Recommended Posts


Turkey's central bank—beset by political instability, tumbling confidence and one of the world's fastest falling currencies—said that it will convene an emergency meeting Tuesday, a move that could test whether once-golden emerging markets can avert a destabilizing crisis.

Central bankers in many emerging-market countries are under intense political pressure to keep interest rates low to keep economic growth on track, despite the...

Share this post

Link to post
Share on other sites


A SENSE that things are sliding out of control has gripped Turkey since prosecutors launched a series of investigations into bribery and corruption close to the government in mid-December. Even if official charges and convictions never materialise, enough has come out to unsettle foreign and local investors. It casts serious doubt on the independence of the country’s police and the judiciary, and their ability to enforce the law.

Turkey suddenly looks more like the country it was trying to leave back in the shadows a dozen years ago. Inflation is running at over 7%, the currency is sliding and the current-account deficit is around 7% of GDP. Private savings, foreign investment and exports are shrinking.

What is to be done? Ask any orthodox economist and he will probably say, “first raise the headline interest rate,” which Turkey’s central bank has held obstinately below 8% since last March (see chart). The central bank’s lending rate should be a good 11%, calculates Murat Ucer at Istanbul Analytics, a consultancy.

Extraordinarily, however, this vital tool of monetary policy is not one that the central bank is prepared to use at the moment. It prefers an alternative technique, known as the reserve-option mechanism. This allows Turkish banks to keep part of their reserve requirements in foreign currency rather than in Turkish lira. When foreign money was flooding into the country this was a good way of relieving upward pressure on the lira. But with the currency weakening it makes little sense—except as a way of unsettling investors.

More at the economist.

Share this post

Link to post
Share on other sites

Create an account or sign in to comment

You need to be a member in order to leave a comment

Create an account

Sign up for a new account in our community. It's easy!

Register a new account

Sign in

Already have an account? Sign in here.

Sign In Now
Sign in to follow this  

  • Recently Browsing   0 members

    No registered users viewing this page.

  • The Prime Minister stated that there were three Brexit options available to the UK:   216 members have voted

    1. 1. Which of the Prime Minister's options would you choose?

      • Leave with the negotiated deal
      • Remain
      • Leave with no deal

    Please sign in or register to vote in this poll. View topic


Important Information

We have placed cookies on your device to help make this website better. You can adjust your cookie settings, otherwise we'll assume you're okay to continue.