Lira Dives 10% at Open, Turkish Banks Now Insolvent: Get Your Money Out Now!

Warning to Turkish Citizens: Get Your Money Out Now!

Following emergency bank meetings and numerous pleas by Erdogan for Turks not to "pull FX out of their banks," blaming the country's current economic crisis on America, the Lira has opened massively weaker - crashing below 7.00 per dollar for the first time ever.

"I’m calling out to industrialists, do not attack banks to buy FX," said Turkish President Recep Tayyip Erdogan in a speech in Trabzon.

"It is industrialists’ duty too to keep this nation on its feet. Otherwise we will set into motion our plan B and C," he added.

Reuters reports a low level of 7.22 - all of which implies the Turkish banking system is done.

As Goldman Sachs warned, further lira depreciation to 7.1 would erode all of Turkey's banks' excess capital.

Turkish Lira on Hyperinflation Path

Plan B or C

I suggest one of then is capital controls​. Hyperinflation may easily set in. If you have money in Turkish banks, take it out now, if you can.

Mike "Mish" Shedlock

Comments
No. 1-17
hmk
hmk

A big portion of their problem is that their debt is denominated in other currencies like euro's and usd, as I understand it. Why would they borrow money denominated in currency other than their own? These currency crisis occur routinely do these emerging market economies not learn from past mistakes?

themonosynaptic
themonosynaptic

You might want to cancel any vacations to Turkey Mish - Ergodan is going after social media users who post negative things about the Lira - "Get your money out now" will, I speculate, fall under things Ergodan does not want spread on social media.

caradoc-again
caradoc-again

Banking issue + possible migrant surge = financial + social stress.

caradoc-again
caradoc-again

ECB may have to calm nerves in some euro banks. If they don't tread carefully a full-on panic can ensue or Erdogan will start to point at foreign banks and consider lifting barrier on migrants into Europe as a bargaining chip for support.

The fragility of EU banks is not to be underestimated. They still apply old stress tests as they couldn't pass the new. Fudge and sticking plasters will come undone one day.

Failure to face their weaknesses won't make them stronger, a real world test is coming.

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