Turkey's woes today

Turkey's currency, the lira, has hit record lows, creating a headache for the country's president and pushing up prices on everyday items. Although the exact cause is, of course, hard to say, tourism bookings to Turkey have gone up in recent months. Holiday company Thomas Cook has seen a 63% rise in bookings to Turkey.

• On Fri Aug 10, 2018, the US dollar would buy almost six Turkish lira; at the end of January, it would have got you less than four. The Turkey's currency Lira, has lost more than 34% of its value against the US dollar.
• The stock market has also fallen 17%.
• Government borrowing costs have risen to 18% a year.
• Inflation in Turkey has hit 15%.

The causes are:

• Investors are worried that Turkish companies that borrowed heavily to profit from a construction boom will struggle to repay loans in dollars and euros, as the weakened lira means there is now more to pay back.
• Turkey's worsening relations with Trump administration with sanctions due to the detention of American pastor Andrew Brunson, who has has been held for nearly two years over alleged links to political groups.
• On Fri Aug 10, 2018, the US dealt Turkey and the lira a further blow when Trump said he had approved the doubling of tariffs on Turkish steel and aluminium.

These problems were compounded by a political set-up which is unconducive to proper economic management. Much of the recent concern has been fueled by President Recep Tayyip Erdogan's economic policy. Flustered by the current situation, President Erdogan urged supporters not to worry, saying that while overseas investors had dollars, Turks had Allah. Meanwhile, UK Foreign Office recommends against all but essential travel to a number of regions and says not to travel within 10 km of the Syrian border at all, due to the ongoing Syrian war. The US rates Turkey at level three, urging people to reconsider travel to the region.

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Although far better, India's direction is Turkish way. Today INR stands eroded by 16% against USD in the past 2 years. In 2018, INR lost 8% value against USD. Our FE reserves is looking southwards. Trade deficit increasing due to reckless import of non-essential items from China. Exports stagnating, inflation above 5% are other negatives. Flight of dollars is due to Fed Reserve increasing interest rates indicates our vulnerability. Increasing oil prices suggest that INR will remain under pressure for many more quarters. Unfortunately, our government doesn't have any plans to resurrect while preferring to be in observing mode perennially.