Turkish inflation likely marched higher in October, when the embattled lira shed value to finish as the world’s worst-performing currency. Retail prices in Istanbul rose 2.45% in October from the previous month, according to the Istanbul Chamber of Commerce.
A slew of geopolitical risks, including Erdogan's expansionist foreign adventures have helped collapse the lira, which had already been pummeled by steep monetary easing and a government-led credit surge to combat a coronavirus downturn.
Turkey’s central bank, which has been pursuing backdoor tightening to contain the currency’s losses rather than outright hikes to the benchmark rate, has raised its inflation projections for the end of this year by more than three percentage points to 12.1%.
The lira lost 7.5% against the dollar in October, the most in the world and its steepest monthly decline since a currency crisis in 2018. It’s down nearly 30% since the beginning of the year, making it the weakest emerging markets currency after the Brazilian real.
The Turkish government already faces possible U.S. sanctions over the purchase of a Russian missile system, and is engaged in territorial disputes in the eastern Mediterranean and the Caucasus. The damage done by Turkey’s military adventures in the region, often funded by the small country of Qatar looking for a regional power to climb on, is not to be ignored.
Are these Turkish red circles scattered on the map of the region the fruits of a well-planned policy, an expansionist project or just the reactions of a narcissist?
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