Over the weekend, Recep Tayyip Erdogan dug in his heels amid Turkey’s worsening currency crisis.
Calls for draconian rate hikes and/or an admission from Ankara that an IMF program might be necessary were not only ignored, but specifically ruled out by the Turkish leader, who quite literally claimed he would rather die than succumb to “the interest rate trap”.
“It’s foolish to think Turkey can be thrown off by FX”, he said on Sunday in Trabzon, adding that “those calling for [an IMF bailout] want Turkey to give up its independence.”
Erdogan’s trio of defiant Sunday rallies came on the heels of a Saturday speech in which he lambasted the Trump administration and variously suggested Turkey would be willing to see its relationship with the U.S. fall apart completely. Those comments echoed a New York Times Op-Ed penned by Erdogan and published on Friday evening. Here’s an excerpt from his 800-word essay, for those who might have missed it:
Before it is too late, Washington must give up the misguided notion that our relationship can be asymmetrical and come to terms with the fact that Turkey has alternatives. Failure to reverse this trend of unilateralism and disrespect will require us to start looking for new friends and allies.
Exactly none of that was comforting for anxious markets and in decidedly thin early Asian trading, the lira was quoted above 7. According to Bloomberg’s data, USDTRY surged as much as 13% to 7.2362.
“A limited number of banks appeared to be providing quotes in early trading and bid- ask spreads from most were at least 0.02 lira per dollar”, Bloomberg notes.
Finance Twitter is amused.
Asian trading starts with #lira hitting new low of 7.1636 per $. pic.twitter.com/MbdrVQXoOa
— Fercan Yalinkilic (@FercanY) August 12, 2018
The Turkish lira is getting hit hard again, even after last week’s frenzied sell-off. pic.twitter.com/Tc0ouCsShl
— Adam Samson (@adamsamson) August 12, 2018