News Analysis |
The crisis in Turkey is no longer limited to threatening its own territory, only. In fact, this crisis is spreading to other emerging markets like India, Argentina, and South Africa. On 15th August 2018, the Indian Rupee hit an all-time low against the US dollar. Following the fall in South African rand and Argentinean Peso in the past few days, the Indian Rupee falls next in line to suffer because of the Turkish Lira crisis.
Many fear that this crisis holds potential to damage the global financial system. The Indian currency, on Monday, experienced a sharp decline with its rupee resulting to 70.0850 against the dollar at 9 am. An expert, Jameel Ahmed, head of global head of currency strategy and market research at FXTM, remarked that the rupee fell “as a result of the risk off atmosphere across global markets.”
President of Turkey, Recep Tayyip Erdogan tried to assure Turkey and other fellow concerned stakeholders that the Lira would stabilize gradually, “in time”
Sources indicate that much of the Turkish Lira depends on the loans or foreign debts borrowed from other countries and that the worsening conditions among the NATO allies might result costly for emerging markets. Analysts have been keeping track on the fall in Lira and devising a pattern accordingly.
Read more: Turkey’s lira crisis: How bad can it get?
The Turkish Lira plunged more than 18% last Friday, followed by its steep slide on Monday, shedding around 9%, and with no signs of sell-offs. Overall until now, it has lost 40% of its value in August 2018. President of Turkey, Recep Tayyip Erdogan tried to assure Turkey and other fellow concerned stakeholders that the Lira would stabilize gradually, “in time”.
Read more: Turkey pledges lira action to calm markets
Furthermore, the Turkish president countered the belief in the traditional economic theory, which raising his country’s interest rates would slow down the rate of inflation. However, looking at US sanctions against Turkey and Turkey’s retaliation in response, people are expecting this financial crisis turning out to be a global financial war among the NATO allies.