The Turkish tragedy

The Turkish tragedy

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Turkey and emerging markets 

Recep Tayyip Erdogan thinks that cutting interest rates will help stabilise the Turkish currency and control inflation. He is wrong. Here is the lira against the dollar since 2014, the year he became Turkey’s president (this and the following charts use data from Bloomberg):

The red circle shows the latest Turkish currency crisis, which follows the central bank cutting interest rates to 15 per cent (they were 19 per cent in September) and Erdogan making a combative speech damning global finance on Tuesday.

Here is how investors in Turkish shares have done, in lira and in dollars:

It’s remarkable, given the devastation of the lira, that hard currency investors have only lost half their money in Turkish stocks. But for the nation, the situation