The Turkish lira has continued its downward spiral after the country’s finance minister, Berat Albayrak, stated U.S. trade sanctions against Ankara could intensely damage the Middle East. Investors were apparently taken aback by the minister’s rhetoric against the U.S. and therefore released their investments from the country’s businesses. This is something that has happened a substantial amount of times throughout the last months, as conflicts between Turkey and the U.S. seem to be directly affecting the state of the country’s currency. The currency is currently standing at a value of 6.2561 to the dollar.
This marks the currency’s 38% drop in value since the year started, a number that found itself merely at 20% at the beginning of June. Contributing to that downfall is the detention of an American evangelical Christian pastor in the European country, which started the transatlantic conflict. Tensions grew as president Trump stated that he would proceed to include Turkey in his ongoing trade wars. His statement became the first red flag for investors in the nation, which have only become more scared as time went by.
Someone who has been quite unhelpful for the country’s economic stability is President Recep Tayipp Erdogan. He has been rightfully called the “enemy of interest rates”, making reference to the fact that, in a very stubborn way, he has always refused to increase interest rates for investments in his country. This has been despite the advice from many economists and foreign policy specialists, who urge him to improve Turkey’s situation by doing so.
Tim Ash of BlueBay Asset Management stated in an email to Reuters:
“At this point in time Turkey has become pretty much un-tradable. The market wants to see specific delivery on policy whether that is monetary, fiscal or action to clear up problems in the banking sector.”
While the government is currently blaming international forces for the economic crisis, it is becoming clearer that Turkey is attacking itself.