Was the low interest rate a problem for Turkey
– No.
Was the problem a negative current account, high inflation,
corrupted governance and inefficient economy – Yes.
Would the easiest way to reverse the current account balance
have been to let the lira float weaker up to the equilibrium point – Yes
Will the interest rate hike attract hot money-flows to
return to Turkey
– Yes
Will the new hot money be even more fickle than the previous
allotments – Yes.
Will the interest rate hike improve the real economy – No
Do I now feel that everything in Turkey
is fine and problems are solved – No.
Does this remind me of 1992 when FX stability was deemed
more important than everything else – Yes.
Will this do anything but force other countries suffering
from outbound hot money flows to raise interest rates or introduce capital
controls – No.
Turkey Hikes Overnight Rate By 4.25% To 12%, Blows Away Expectations – ZH
World Markets React
To Turkey's 425bps Rate Hike – ZH
SocGen's Exuberant
Response To The Turkish Action –ZH
"Governor Basci, You Have Avoided A Domino Crisis In
EM"
Turkey’s Central Bank
Declares a Shock-and-Awe Rate Hike – WSJ
Turkey hikes, aggressively – alphaville
/ FT
Turkish central bank
makes massive rate hikes to stem lira fall – Reuters
Turkey More Than Doubles Interest Rate in Emergency Move to Bolster Lira –
BB
Turkey’s Continental Divide – BB
Yen Slips With Gold
as Turkey Rate Rise Lifts Asia Stocks – BB