Turkey -- Currency Crisis in the Making?

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watchnerd
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Turkey -- Currency Crisis in the Making?

Post by watchnerd »

This could be the start of something:

https://www.bbc.com/news/business-56479702

https://www.theguardian.com/world/2021/ ... bank-chief

https://www.economist.com/europe/2021/0 ... nl_today_2
"The base premise of Erdonomics is that higher interest rates cause higher inflation, a theory that flies in the face of conventional economic theory everywhere," Mr Halley told the BBC.
10 YR Treasuries climbed today / yields dropped due to what some pundits are saying is a flight to safety in light of this.

I was expecting EM bonds to take a bit of a tumble as a result, but I'm not seeing evidence of that yet.
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Tellurius
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Re: Turkey -- Currency Crisis in the Making?

Post by Tellurius »

watchnerd wrote: Mon Mar 22, 2021 5:03 pm This could be the start of something:

https://www.bbc.com/news/business-56479702

https://www.theguardian.com/world/2021/ ... bank-chief

https://www.economist.com/europe/2021/0 ... nl_today_2
"The base premise of Erdonomics is that higher interest rates cause higher inflation, a theory that flies in the face of conventional economic theory everywhere," Mr Halley told the BBC.
10 YR Treasuries climbed today / yields dropped due to what some pundits are saying is a flight to safety in light of this.

I was expecting EM bonds to take a bit of a tumble as a result, but I'm not seeing evidence of that yet.
Interesting question. I guess he thinks higher interest rates by the central bank increase the money supply faster?
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invest2bfree
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Re: Turkey -- Currency Crisis in the Making?

Post by invest2bfree »

Mike Norman agrees with Ergodoan-

https://youtu.be/NmYqdQgTMck

Currencies are complex to forecast.

US has 10% current account and 10% fiscal deficit.
Now if this was an emerging market our currency would have been trashed.

But we are a reserve currency so we strengthen.
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drk
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Re: Turkey -- Currency Crisis in the Making?

Post by drk »

In the making? The jump in USD/TRY seems to indicate that the crisis is already alive and kicking.
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Godot
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Re: Turkey -- Currency Crisis in the Making?

Post by Godot »

watchnerd wrote: Mon Mar 22, 2021 5:03 pm This could be the start of something:

https://www.bbc.com/news/business-56479702

https://www.theguardian.com/world/2021/ ... bank-chief

https://www.economist.com/europe/2021/0 ... nl_today_2
"The base premise of Erdonomics is that higher interest rates cause higher inflation, a theory that flies in the face of conventional economic theory everywhere," Mr Halley told the BBC.
10 YR Treasuries climbed today / yields dropped due to what some pundits are saying is a flight to safety in light of this.

I was expecting EM bonds to take a bit of a tumble as a result, but I'm not seeing evidence of that yet.
Prescient.
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flyingaway
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Re: Turkey -- Currency Crisis in the Making?

Post by flyingaway »

Maybe it's a good time to book a travel to Turkey know.
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whodidntante
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Re: Turkey -- Currency Crisis in the Making?

Post by whodidntante »

flyingaway wrote: Wed Nov 24, 2021 7:10 pm Maybe it's a good time to book a travel to Turkey know.
That was my first thought. It's on my list of must-see places before I croak. Bogleheads low expenses trip? :happy
Valuethinker
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Re: Turkey -- Currency Crisis in the Making?

Post by Valuethinker »

whodidntante wrote: Wed Nov 24, 2021 7:14 pm
flyingaway wrote: Wed Nov 24, 2021 7:10 pm Maybe it's a good time to book a travel to Turkey know.
That was my first thought. It's on my list of must-see places before I croak. Bogleheads low expenses trip? :happy
Check their Covid incidence & vaccination levels? It's very high in "outer Europe" (WHO definitions include places like Armenia and Azerbaijan as "Europe" so perhaps Turkey also).

The pattern of last summer was tourists from places like the UK flew down there and spread their relatively high incidence of the virus to the locals and to each other. AFAIK Turkey is open to UK flyers.

There's a lot of wonderful stuff in Turkey, and wonderful people.
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Re: Turkey -- Currency Crisis in the Making?

Post by Valuethinker »

Tellurius wrote: Mon Mar 22, 2021 5:10 pm
watchnerd wrote: Mon Mar 22, 2021 5:03 pm This could be the start of something:

https://www.bbc.com/news/business-56479702

https://www.theguardian.com/world/2021/ ... bank-chief

https://www.economist.com/europe/2021/0 ... nl_today_2
"The base premise of Erdonomics is that higher interest rates cause higher inflation, a theory that flies in the face of conventional economic theory everywhere," Mr Halley told the BBC.
10 YR Treasuries climbed today / yields dropped due to what some pundits are saying is a flight to safety in light of this.

I was expecting EM bonds to take a bit of a tumble as a result, but I'm not seeing evidence of that yet.
Interesting question. I guess he thinks higher interest rates by the central bank increase the money supply faster?
I think that is crediting Erdogan with too much economic knowledge of concepts like "money supply".

He probably sees it that as mortgage rates go up, expenses of his voters go up. It's as simple as that, I imagine.

Turkey has been on the verge of a currency crisis for so long that I have lost track of the time. Someday it probably will happen.
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Re: Turkey -- Currency Crisis in the Making?

Post by Forester »

whodidntante wrote: Wed Nov 24, 2021 7:14 pm
flyingaway wrote: Wed Nov 24, 2021 7:10 pm Maybe it's a good time to book a travel to Turkey know.
That was my first thought. It's on my list of must-see places before I croak. Bogleheads low expenses trip? :happy
Istanbul is the best tourist city I have ever visited. Historical sites + excellent cheap public transport. Also a good city for cheap medical tourism.
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nisiprius
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Re: Turkey -- Currency Crisis in the Making?

Post by nisiprius »

Hmmm... There is a S&P Turkey Sovereign Inflation-linked Bond Index, but I can't find any ETF that tracks it.

It might be interesting to try to find out how the value of the bonds themselves track Turkish inflation, with particular emphasis on bonds as they mature. Not sure how to go about that myself. But in order to judge whether TIPS will protect against US inflation, it would be nice to know if Turkish inflation-linked bonds are protecting against Turkish inflation.

Image

Image

Looks like... yes?
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stocknoob4111
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Re: Turkey -- Currency Crisis in the Making?

Post by stocknoob4111 »

flyingaway wrote: Wed Nov 24, 2021 7:10 pm Maybe it's a good time to book a travel to Turkey know.
TRY is up 10% but inflation there is running 20% so net more expensive not cheaper
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Re: Turkey -- Currency Crisis in the Making?

Post by bobcat2 »

Valuethinker wrote: Thu Nov 25, 2021 7:36 am
Tellurius wrote: Mon Mar 22, 2021 5:10 pm Interesting question. I guess [Erdogan] thinks higher interest rates by the central bank increase the money supply faster?
I think that is crediting Erdogan with too much economic knowledge of concepts like "money supply".

He probably sees it that as mortgage rates go up, expenses of his voters go up. It's as simple as that, I imagine.

Turkey has been on the verge of a currency crisis for so long that I have lost track of the time. Someday it probably will happen.
:thumbsup :thumbsup

BobK

PS - I have a friend who immigrated from Turkey as a very young man in about 1980. I couldn't quote exactly any one sentence of what my friend thinks of Erdogan or his competency in polite company such as Bogleheads. :)
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