Turkey's Lira is dropping like a stone.
This is a sign that Turkey's huge credit bubble may be on the verge on bursting.
The Central Bank of the Republic of Turkey (CBRT) has already intervened in the foreign exchange market six times today to try prop up the value of the Turkish lira, and hasn't succeded.
The the central bank has flooded the market with $1.4 billion in hard currency in order to boost the lira against the dollar but in spite of all of the dollars being sold into the market by the CBRT, the lira keeps weakening against the dollar.
The rising price of oil and inflation on basic staples is one factor, as is the current political climate in Turkey.
Turkey's economy seems robust, but it actually isn't at all. Inflation is at 6.5% and rising, food prices are soaring, the official unemployment rate is at 9.5% (which means the real rate is closer to 13 or 14%) and there is a major imploding domestic credit bubble in consumer loans, which Turkey's banks are slamming out at 30% interest and up.Meanwhile exports continue to decline and Turkey's current account deficit is running at about $70 billion a year.
Like many Islamists. Erdogan has tried to camoflauge Turkey's economic woes with government subsidies...but that's a tough act to pull off when you don't have oil wealth to draw on. Just ask Basher Assad or Hosni Mubarak.
Stay tuned...the unrest in Turkey might end up getting a whole lot worse in a little while.
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