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Turkey is slowly becoming Argentina

The Turkish lira fell under immense pressure after the Financial Times reported the Turkish central bank (CBRT) used billions of dollars in short-term borrowing to bulk out its reserves.  At one point, the lira was down 2% to the dollar, the lowest levels since October 2018.  Concerns remain high on government’s management of their finances and comparisons are being drawn that Turkey could become Argentina.

Turkey may be too sure that they can fight off any future lira crisis, but if the reserve data continues to remain low, Turkey could in trouble.  The net reserves stood at $28.7 billion last week, but when you pull out the short-term swaps, it ended up being only $16 billion.

Turkey is in a recession and if we see further weakness from the eurozone, we could see further strains on Turkey’s economic data in the next couple months.  Turkey can still finance their internal position, but we could see this go in to panic mode if their situation continues to deteriorate.

 

 

This article is for general information purposes only. It is not investment advice or a solution to buy or sell securities. Opinions are the authors; not necessarily that of OANDA Corporation or any of its affiliates, subsidiaries, officers or directors. Leveraged trading is high risk and not suitable for all. You could lose all of your deposited funds.

Ed Moya

Ed Moya [4]

Senior Market Analyst, The Americas at OANDA
With more than 20 years’ trading experience, Ed Moya is a senior market analyst with OANDA, producing up-to-the-minute intermarket analysis, coverage of geopolitical events, central bank policies and market reaction to corporate news. His particular expertise lies across a wide range of asset classes including FX, commodities, fixed income, stocks and cryptocurrencies. Over the course of his career, Ed has worked with some of the leading forex brokerages, research teams and news departments on Wall Street including Global Forex Trading, FX Solutions and Trading Advantage. Most recently he worked with TradeTheNews.com, where he provided market analysis on economic data and corporate news. Based in New York, Ed is a regular guest on several major financial television networks including CNBC, Bloomberg TV, Yahoo! Finance Live, Fox Business and Sky TV. His views are trusted by the world’s most renowned global newswires including Reuters, Bloomberg and the Associated Press, and he is regularly quoted in leading publications such as MSN, MarketWatch, Forbes, Breitbart, The New York Times and The Wall Street Journal. Ed holds a BA in Economics from Rutgers University.
Ed Moya