Lira Plummets As Erdogan Defies Markets, Urges Citizens To Exchange Dollars For Lira

Heading into today's much anticipated speech by Turkey's president Erdogan, market expectations were high for at least a trace of conciliation; some analysts even expressed hopes that the central bank, i.e. Erdogan, would greenlight a rate hike as follows:

  • Fidelity: 1000bps would be a "good start"
  • SocGen: 600bps
  • ADM's Ostwald: 500bps + IMF's bailout
  • UBS: 350-400bps

However, it was not meant to be, and it will probably not comes as a great surprise that the recently crowned "executive president" took the populist route and again urged Turks to "reach for the FX savings under their mattresses and sell them for liras" which he said is going to be the most effective response to the West... although probably not, because as Bloomberg points out, according to the the latest data Turkish residents held $158.6 billion dollars of FX deposits as of Aug. 3, and the number has surely risen in the past week.

Here is the punchline from his speech:

"We're going to continue to respond in kind to hands extended in friendship. Still, we have plans against all possibilities. I'm calling on interest rates lobbies: don't get high on your ambitions. You won't be able make money on the back of this nation. You won't be able to make this nation kneel."

Some more highlights from Erdogan's defiant speech:

  • Turkey won't give in to economic hitmen
  • "It’s a national, local struggle. It’s going to be my nation’s response to those waging an economic war against us"
  • The "interest rate lobby" won’t be able to bring Turkey down
  • Sees "no issues in Turkey macroeconomic data, banking system."
  • Turkey's facing a wave of artificial financial instability
  • Turkey’s prepared for all possible negative developments
  • Turkey’s facing a wave of “artificial financial instability"
  • Turkey’s made headway in “alternatives" from China and Russia to Iran

As Bloomberg points out, the reference to China, Russia and Iran "will set off alarm bells in Washington."

Turkey has plans to buy S-400 surface-to-air missiles from Russia, which NATO says are not inter-operable with NATO forces. Turkey was the first country Putin visited after his March 18 re-election. Cooperation between Russia and Turkey -- on nuclear power, energy pipelines, arms and tourism -- is at record levels.

The rest of the speech was more of the same, which the market quickly interpreted as Erdogan's defiance and unwillingness to change course, and as a result the Lira collapse has resumed...

... Turkish yields have resumed their surge to all time highs...

... and the TUR ETF is plunging.

Meanwhile fears of Turkish contagion have sent European banks tumbling to the lowest level since July 23.

Comments

BobEore BigFatUglyBubble Fri, 08/10/2018 - 09:04 Permalink

 "reach for the FX savings under their mattresses and sell them for liras" which he said is going to be the most effective response to the West...

Unwilling to even correctly parse the actual nature of the quoted potentates' palaver, our 'alt-media' champions conveniently skirt the baking crow pie in the oven, by making ZERO mention of the word 

GOLD. Which is what the supreme leader suggested his dejected minions pull out of their mats to turn into SILVER bullets against the GREAT SHEITAN of the west. That is correct... contrary to the endless BULLSHIT disgorging from the mouths of witless writers and their gormless groupies... the great one is and has always attempted to shake down his  shitizens... for their real savings. NOT "FX" TARDS. 

GOLD. NOW Please line yourselves up for the perp walk along with all the special geniuses who knew how to play the gold game to win. Cmon- don't be shy of a sudden PIGSY...dANno, sCUBEY, jERsey, Phili and the gang. Those who pissed on my 'GOLDEN PARACHUTE strategy' for the past 7 seven years... hands up... pants down. 

Yur boys didn't tell ya the gold action here today. - I won't either. I got somethin even better for yas to 'back up yur trucks' on to. My silver is up up currently 9% on the DAY... 120% on  the FIVE YEAR. You and your 5 eyes minted trash - down 10% on the fiver... silver, well you definitely do not want to know. 

Stic a fork in yourselves turkeybirds... 

you done done.

 

In reply to by BigFatUglyBubble

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In reply to by silverer

nmewn Fri, 08/10/2018 - 08:36 Permalink

"reach for the FX savings under their mattresses and sell them for liras"

eh heh...eh heh heh heh...AAAHAHAHAHAHAHAHAHAHAHAHAHAHAHAHAHAAA!!!

withglee Fri, 08/10/2018 - 09:02 Permalink

It's just amazing all the nonsense that goes on when the money they think they manage (manipulate) is not money at all.

If Turkey instituted a "real" money process, they couldn't manipulate it. Further, if the USA instituted a "real" money process, it wouldn't matter whether your money was in dollars or lira. The exchange rate would be perpetually constant.

Ah ... if we could just get one instance of "real" money into existence, all this nonsense just disappears in short order. All other money falls into disuse. When they have a choice, traders will not rely on inferior money to effect their trading promises over time and space. They have enough trouble with the trade itself without having to deal with the nonsense of the money value gyrating all over the place.

And it would be oh so easy to institute a "real" money process to compete with the money changers. The money changers couldn't do anything to stop it without revealing that they have been screwing traders (like you and me) throughout all of history.

It would also greatly weaken the governments the money changers have instituted for their own protection. The governments could not use manipulation of the money to gain power. They would have to get their power (customers) from actually delivering on their promises.

small axe Fri, 08/10/2018 - 09:20 Permalink
  • Fidelity: 1000bps would be a "good start"
  • SocGen: 600bps
  • ADM's Ostwald: 500bps + IMF's bailout
  • UBS: 350-400bps

 

the foot soldiers of the international criminal banking cartel weigh in on how they would like their pound of flesh cooked.

Paracelsus Fri, 08/10/2018 - 11:34 Permalink

1. Erdogan trots out the old "get out of Incirclik,Yankee go home" nonsense.

2. Erdogan's hot tub has a serious electrical malfunction.

3. "Who run Barter-town?"

Paracelsus Fri, 08/10/2018 - 11:44 Permalink

Last time I looked at a map all the water for "Country#1" came from the snow-pack run-off of the Turkish mountains. This is about future access to underground aquifirs.

 

Lie_Detector Fri, 08/10/2018 - 15:09 Permalink

To the Turkish people, sell your gold and US dollars to prop up the Lira.

Look what happened in Venezuela. Hungry people with wheel barrels full of "cash", being weighed to pay for a dozen eggs. 

It has been said an ounce of silver will buy a family of 4 about 6 months worth of food. 

With subsidized gasoline I heard recently that one US dollar would buy hundreds of thousands of gallons of gasoline 

in Venezuela. I doubt any Turks with US dollars or gold will buy Lira.