Quick action by the Turkish central bank appears to have stemmed pressure in Turkey’s financial markets after the recent sell-off. But the rapid depletion of FX reserves means that policymakers have less scope to act in the event of a renewed spike in political risk and further capital outflows. This could mean that policymakers may have to turn to outright interest rate hikes to defend the currency.
Subscriber content
Read this in full, free
Start a free trial and use one of your 10 free starter credits to unlock this piece.