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Turkey Getting Baked

Ironic that the article about it is being written on the day of Thanksgiving, Yes it is about the chaos that has hit the Turkey(country) economy and citizens. And neither investors nor speculators are in the mood for forgiveness.

A few years ago Turkey was the most sought-after tourist destination with a well-performing economy and had a close prospect of joining the European Union. But within three years the situation has flipped into chaos.

If some of the facts are to be looked at then, to start with central bank governor has been changed three times in the last three years. In the last eighteen months policy has shifted from hiking rates to reducing rates. And the most impactful pain, inflation is at 17.5% according to official data.

All this reflects in foreign exchange as the investors pull out their investments as much and as quickly as possible. In addition, speculators create large negative positions against the currency. This overall has resulted in Lira (official currency) depreciating by 40% against USD in a year and to make matters worst this week it dropped 15% in a day.

This kind of impact to a country that has tourist revenues as major earning can see to be attractive but local disruptions and protests do not make it that attractive.

It is also understood that such a move has been done to increase growth in local currency and attract foreign investments. But instead has resulted in even a company like Apple stopping sales of its products as the currency movement is a major risk.


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