Turkey's economic and financial situation is running fast:
As a recession settled in Turkey after an exchange rate last summer and a selloff in gets the stake higher. Turkey pledged foreign capital to finance its credit-driven growth in 2016-2017, a period when portfolio inflow averaged $ 1.3 billion. Dollar a month, and the current account sank deeper into the deficit. Investors fled Turkish assets last year, and the outflow continued for eight months just before stabilization.
This week, Turkey steered further markets by preventing foreign banks from accessing the loans they need to close their swap positions. It has made it almost impossible for bankers to shorten the lira or departure transport and forced the lyric frequency overnight up to approx. 1,000 percent from 23 percent.
Lira Blow Out
Some foreign banks were unable to fulfill their obligations at the end of the deal on Tuesday and forced the central bank to extend transfer hours of funds in Turkey at 21, according to a senior Turkish official who spoke on condition of anonymity. On Tuesday, the Turkish stock and bond markets picked up the measures needed to protect the lira: the bank stock was below 7 percent, and the yield on 10-year lira bonds rose 74 basis points to 18.23 percent. 19659008] Turkey's shocking interventions this week – which tried to punish speculators who took action – is more affirmative of the country's economic and economic situation sprouting out of control . The primary cause of this turmoil is the outbreak of Turkey's 15-year credit bubble (see my warning about this). In summary, a credit bubble was formed in Turkey, which began in the early 2000s, leading to an artificial economic boom.
The credit for the private sector grew from approx. 15% of GDP in 2003 to 70% of GDP in 2016. Rising interest rates
Unfortunately, Turkey's situation will only get worse – a 15-year credit bubble will not resolve in just six months. This week's foreign exchange intervention will only scare off foreign investors, which will contribute to the downward spiral.
Turkey is just one of many emerging economies that have experienced credit bubbles over the past decade due to the stimulating actions of global central banks. Bubbles – including that in Turkey – have caused global debt to explode by 150 trillion in 15 years and $ 70 trillion in 10 years. Even if you do not invest directly in Turkey, you are still likely to be at risk of infection. Welcome to the downside of globalization.
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