A diplomatic spat between Turkey and its Western allies this week was quickly resolved, but it highlighted how vulnerable the lira is to geopolitical developments. And comments from Turkey’s central bank governor suggest that policymakers are becoming more tolerant of falls in the currency. Elsewhere, the European Court of Justice’s decision to impose a daily penalty of €1m on Poland adds to signs that the disbursement of EU funds to Poland will be delayed further. Perhaps more immediately, one of the casualties has been the zloty.
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