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1,000,000%

25 July 2018 by lberuti

The last few weeks have proved quite volatile as far as Turkey’s 5-year risk premium was concerned, especially since Mr Erdogan claimed the exclusive right to name Central Bank (CBRT) rate setters. His grip over monetary policy was obvious in yesterday’s unexpected decision by the CBRT to leave rates unchanged. It prompted a 3% loss of the lira against the US dollar, and pushed Turkey’s risk premium 22bps wider to 315bps, near its recent wides. Mr Erdogan wants to limit rate hikes in order to avoid hurting growth, regardless of inflation. The next report on that front is due towards the end of next week. It will follow a 15.4% (YoY) print released for the month of June, but it will certainly pale in comparison with the shocking number announced yesterday by the IMF regarding Venezuela. They expect inflation to hit 1,000,000% by the end of the year in the Bolivarian Republic, a situation only comparable to Germany in the 1920s. That is almost 4% per day…