Turkish shares have rallied on hopes that a period of monetary misrule is coming to an end. Inflation is at 12%, but strongman leader Recep Tayyip Erdogan believes in the “bizarre” idea that higher interest rates cause inflation rather than curb it, says The Economist. The central bank has thus resisted desperately needed rate hikes this year, instead “squandering more than $100bn” in currency reserves in a forlorn attempt to defend the currency over the summer.
The Turkish lira has lost more than 60% of its value against the dollar over the past five years owing to poor monetary policy. Yet this month has seen the replacement of both the central bank governor and finance minister. The lira has rallied on hopes that they will usher in a period of more sensible policy, while local stocks are up by 14% so far this month.
Turkey’s economic management has long been a “train-wreck”, writes Craig Mellow in Barron’s. A buoyant European economy and plenty of cash from tourism helped Turkey dig its way out of its last currency crisis in 2018, but this year tourists will be staying at home. Erdogan didn’t learn his lesson from that episode and soon returned to “pumping credit…revving inflation and depressing the lira again”, precipitating the current problems. The recent stockmarket jumps show that the brave can make a buck in Turkey, but it looks more like gambling than investing.
Subscribe to MoneyWeek
Subscribe to MoneyWeek today and get your first six magazine issues absolutely FREE
Sign up to Money Morning
Don't miss the latest investment and personal finances news, market analysis, plus money-saving tips with our free twice-daily newsletter
Don't miss the latest investment and personal finances news, market analysis, plus money-saving tips with our free twice-daily newsletter
-
Can you afford to retire in 2025?From interest rates and inflation to tax changes, there are plenty of factors to consider if you plan to retire next year – here is how to prepare.
-
8 of the best properties for sale near ski slopesThe best properties for sale near ski slopes – from a luxury cabin in Geilo, one of Norway’s premier ski resorts, to a large chalet in Valais, Switzerland
-
Rouble hits two-year low against the dollar – what does it mean for Russia's economy?New US sanctions have plunged the rouble to its lowest level since 2022. Why are investors spooked and how will this affect Putin's economy?
-
How Finseta is cashing in on currenciesFinseta has established a foothold in the upper echelons of the market for international payments. Should you invest?
-
Is the US dollar losing its appeal?The US dollar is looking oversold in the short term and is due a bounce. What does it mean for global markets and the upcoming US elections?
-
What does a weak yen mean for Japan's economy?The Japanese yen slumped to a 34-year low. What does a weak yen mean for inflation, interest rates and tourism in Japan?
-
Why you should keep an eye on the US dollar, the most important price in the worldAdvice The US dollar is the most important asset in the world, dictating the prices of vital commodities. Where it goes next will determine the outlook for the global economy says Dominic Frisby.
-
Sterling accelerates its recovery after chancellor’s U-turn on taxesNews The pound has recovered after Kwasi Kwarteng U-turned on abolishing the top rate of income tax. Saloni Sardana explains what's going on..
-
Will Liz Truss as PM mark a turning point for the pound?Analysis The pound is at its lowest since 1985. But a new government often markets a turning point, says Dominic Frisby. Here, he looks at where sterling might go from here.
-
Are we heading for a sterling crisis?News The pound sliding against the dollar and the euro is symbolic of the UK's economic weakness and a sign that overseas investors losing confidence in the country.
