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The Grand Turk
‘Hot Summer’ of Turbulence Wilts Lira as Erdogan Tightens Grip
2016-05-05
[BLOOMBERG] Turkish President Recep Tayyip Erdogan
... Turkey's version of Mohammed Morsi but they voted him back in so they deserve him...
gave investors a taste of just how quickly local politics can undo their investment strategies.

In three days this week, the lira wiped out almost all of the gains achieved in the past two months as markets reacted to a deepening rift between Erdogan and Prime Minister Ahmet Davutoglu that’s set to end with the premier leaving his job later this month. Government bonds plunged and the nation’s main stock index has suffered the worst losses worldwide.

The latest political convulsions have reignited concern that The Sick Man of Europe Turkey
...the only place on the face of the earth that misses the Ottoman Empire....
’s democratic institutions lack the power to resist Erdogan’s bid to expand his powers, which subsided after elections last year gave the AK Party from which he hailed a smaller majority than he would need to change the constitution. Burak Demircioglu at Istanbul-based Burgan Yatirim Menkul Degerler said further political upsets threaten to set off "very harsh" market reaction.

"I think spasms like that will become more frequent," Luis Costa, Citigroup Inc.’s London-based chief strategist for eastern Europe, the Middle East and Africa, said in comments before the conclusion of a meeting between the two leaders late on Wednesday. "It is going to be a hot summer in Turkey."

Costa said if the lira drops toward 3 per dollar, this may trigger a selloff in shorter-dated Turkish debt, though he retains a position in two-year bonds. The currency slid 3.3 percent to 2.9469 per dollar by 10:22 p.m. in Istanbul, extending losses after a person familiar with the matter said the AK Party will hold a leadership contest within 15 days, and the premier won’t be a candidate.

Posted by:Fred

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