Is Turkey in 2018 similar to Thailand in 1997?

#Turkey doesn’t matter like Thailand didn’t matter in 1998 pic.twitter.com/raewm1BHCX

— OW (@OccupyWisdom) August 11, 2018

Is Turkey in 2018 similar to Thailand in 1997? Thailand’s external debt was $109 bn (65% of GDP), triggered by a currency crisis and sudden loss of investor confidence. This hit the entire EM complex and found its way to the US. Turkey’s external debt is $450 bn, or 56% of GDP

— David Rosenberg (@EconguyRosie) August 10, 2018

Turkey’s loans in US dollars account for around 30% of GDP according to the Washington Post, but loans in euro could be as much as another 20%. pic.twitter.com/dFAvOuW9yC

— Jose Luis Cava (@jluiscava) August 11, 2018

#Subprime is contained t.co/NNELwGxkGA

— OW (@OccupyWisdom) August 11, 2018

A couple of banks mentioned above that are being affected by the Lira devaluation:

France– BNP Paribas  -2.9%

Italian–UniCredit -5.8%

Spain –BBVA  -6.4%

German –DB  -5.4%

German –CS -2.8%

American –C  -2.7%

The Turkish Lira is down 16% just today – a truly massive move for a pretty important country.  This has dragged the Euro down -1.14%, while gold is flat (rallying strongly in Euros), and silver is off -0.85%.

I’m not sure what the knock-on effects of this currency move will be, but I’m sure it will blow someone up, somewhere.  Nobody really expects a semi-major currency to blow out like this; any institutions on the wrong side of derivatives on this currency are going to take enormous losses.

Dragging the Euro down more than 1% is an indication of just how serious this currency move is.

What happens over the weekend?  That’s the question.

As #Turkey crisis deepens, bankers to review impact of shocks. Biggest currency shock for lira since 2001 rattles investors. Turkish market plunge has started to stoke fears of contagion.t.co/8uR2gVfuvI pic.twitter.com/vVtbnF39dG

— Holger Zschaepitz (@Schuldensuehner) August 11, 2018

h/t Dave