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Delight for Turkish Lira after massive rate rises
The Turkish lira soared to a five year high after the central bank implemented unexpected massive rate rises. In a midnight meeting, policy makers took emergency action to protect the country’s currency.
John Hardy, Saxo Bank’s Head of Forex Strategy, defends the central bank’s decision, but warns of the rate hike’s long-term implications. For example, the central bank’s move has prepared the way for a period of inflation in the future. John also doesn’t rule out the threat of an international bail-out. Although the decision provides a response to the panic, what’s needed is Hardy says is fundamental rebalancing.
The U.S. Federal Reserve meeting will have an influential effect on the so called ‘fragile five’ emerging market currencies. The Fed is expected to continue to remove $10 billion a month from the buying program. Making “this Fed meeting…absolutely critical” for emerging markets, according to John Hardy.
01:23 minutes
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