Remember What Happened in 2001?

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With the outbreak of huge financial turmoil of Turkey in 2001, we saw Turkish lira dramatically depreciates against other currencies in nine consecutive days. Even though some dissimilarities exist between today and 2001, the recent moves in Turkish Lira as same as they were 12 years ago.

Turkish lira weakens ninth day against Dollar, and this is the longest losing streak since 2001. The more terrifying thing is that, even though the Central Bank Turkey reduces the amount of one-week repos, cuts one-month repo funding by one billion liras, leads the cost of funding to increase and verbally intervenes with its statements mentioning no way for easing, the lira keeps on tumbling.

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My words should not be considered as a call out for a crisis, but still, following the horrible inflation announcement, analysts simply forecast a less than expected growth and a higher than expected inflation. In other words, this has a potential to turn into a stagflation, according to Introduction to Macroeconomics books.

Things are likely to get ugly.

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