Macro Analysis / Turkey

Charting Turkey’s currency crisis

  • Turkey’s credit-fuelled growth model has led to unsustainable credit growth, high inflation and external imbalances
  • Covid-19 triggered a currency adjustment, with CBRT interventions draining reserves and causing market dislocations
  • CBRT is tightening by the backdoor, but TRY pressure will persist while CBRT avoids rate hikes due to low credibility
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