A sharp plunge in the value of the Turkish Lira against the US dollar meant the emerging market economy dominated business headlines this week. The currency fell to a near-record low before rebounding slightly, after the country’s Banking Regulation and Supervision Agency tightened rules enabling foreign accounts to sell out of the currency and make bets against it. A spat with the US has proven the tipping point in investor confidence, with President Trump approving the doubling of steel and aluminium tariffs after Turkey failed to free American pastor Andrew Brunson. However, Turkey’s high level of foreign-denominated, non-corporate debt seems to have set it up for a fall, not only making it more vulnerable to a downturn in foreign investor sentiment but also rising US rates, which have pushed up the value of that debt.
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