The Turkish currency has joined dubious club of Venezuela and Argentina as it has declined more than 16 per cent against the dollar in 2018. With double digit inflation at home and over $222 billion of net debt held by Turkish non-financial companies in overseas currencies, the cost of business in Turkey is fast approaching unsustainable.
A self-described “enemy of interest rates”, President Erdogan wants to see lower borrowing costs to fuel credit. Investors want decisive interest rate increases. The indecision by the central bank, or rather its decision to tow the political leadership is costing dearly to the country.
Local Brokerages have blamed the Central Bank “We’re faced with a central bank that is watching the market when it needs to lead and direct it” Istanbul-based broker Alnus Yatirim said.
Annual inflation stood at 10.85 percent in April, and it has been as high as 12.98 percent in recent months.
With the country actively in war with Kurds in south and playing difficult with its NATO allies is short of friends it desperately needs. President Erdogan, however remains powerful and is expected to win next month’s presidential election.
