Confirming that the president of Turkey may not be the most erudite central banker - despite the powers he decreed upon himself on Tuesday which grant him the power to appoint the next Turkish central bank head - moments ago Erdogan reportedly said the following two mutually contradictory statements:
- ERDOGAN: WE WILL SEE THE DOLLAR DEPRECIATING VS LIRA `SOON': HT
So far so good: after all, with the Turkish Lira plunging to all time lows earlier, the last thing Turkey needs is FX capital controls to contain what is now runaway inflation, and a blowing out current account deficit.
And yet, in the very next soundbite, Erdogan said something which makes no sense in light of the above: he vowed to lower rates, precisely as the market has been worried he would, to "boost" the economy which is already in a state of near collapse as a result of soaring prices.
- ERDOGAN SAYS INTEREST RATES TO GO DOWN IN UPCOMING PERIOD: AHBR
Alas, it seems that Erdogan does not comprehend that these two are mutually exclusive, and the result is that the Turkish Lira has stumbled once more, sliding to 4.80 for the first time ever, and a new all time low as the market start to give up on what is clearly the next EM basket case, albeit one with huge strategic importance for the rest of the market.