10/08/2018 – 15:00: The collapse of the Turkish lira is going to continue. Only today, Friday, the Lira lost up to 12% in value against the U.S. dollar.
For the current year 2018, the loss in value amounts to 35%. These turbulences are also spreading to the interest rate market. 10-year bonds are now yielding 20%!
The market is increasingly losing faith in the promises made by President Erdogan and his Finance Minister Albayrak, who is also his son-in-law, to boost the economy and “implement a new economic model”. In addition, the ECB is concerned about the exposure of European banks in the Turkish currency. The worries are not entirely unfounded. As reported in the Financial Times, UniCredit (Italy), BNP Paribas (France) and BBVA (Spain) are “significantly exposed” in Turkey. Whether President Erdogan’s appeal helps the lira may be doubted. He suggests “take dollars, euros and gold out of his pillow and bring them to the bank!”
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