Erdogan reacts to Turkish Lira collapse – “THEY HAVE DOLLARS, BUT WE HAVE ALLAH”

Turkey Meltdown: Lira Implodes As Panicked Sellers Spark Global Contagion

Today’s meltdown took place ahead of a much-anticipated public address by President Recep Tayyip Erdogan.

Speaking outside a mosque earlier today, Erdogan told followers “Don’t forget this: if they have got dollars, we have got our people, our right, our Allah.”

Commenting on Erdogan’s statement, Bloomberg macro commentator Stephen Kirkland said that it signals he’s sticking to a nationalist message and uninclined to deliver the hard measures Turkish assets need. As a result, option markets are now pricing in a one-in-five chance of USD/TRY reaching 7 per dollar in a month, from about 1% probability yesterday, at which point Turkish excess bank capital is wiped out and the currency crisis becomes a full blown financial panic. Meanwhile, three-month USD/TRY risk reversals have shot up to the highest since 2009 and lira forward points have never been this high in Bloomberg data that goes back to December 1996.

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That market capitulation offers Erdogan an element of surprise to turn things around for the lira. Instead, it’s looking increasingly like it may have much further to fall before he takes the necessary action.

The Lira has plunged after Erdogan’s comments. Turkey is going to implode. We are on the point of financial contagion, first phase of the economic collapse – EM will be hit really hard and Erdogan could literally go crazy and start attacking its neighbours.


h/t Spanish_guy




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