'Timing is of the essence': Can Turkey recover from currency crisis and prevent wider EM contagion risk?

Managers warn of consequences from fall in lira

Managers have warned more pain may lie ahead for Turkey as the country tries to recover from its recent currency crisis unless the authorities can restore market confidence through credible policy actions, while there is a threat its troubles could "morph into a systemic risk for other emerging market countries".

The Turkish lira plunged 11% against the US dollar last Monday to hit a record low of TL7.2149, following a 20% fall the previous week, as a row with the US pushed Turkey into a full blown currency crisis.   US President Donald Trump approved doubling tariffs on Turkish steel and aluminium, following Turkey's refusal to free an American pastor who had been detained in the country for nearly two years. Turkey later retaliated by raising tariffs on American cars, alcohol and cigarettes. Although by last Thursday the lira had recovered some of its weekly losses, the Turkish currency is s...