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| Trump doubles Turkish tariffs as lira plunges to record lows - business live | Trump doubles Turkish tariffs as lira plunges to record lows - business live |
| (35 minutes later) | |
| Heading into the market close in Europe, and investors have taken fright at the Turkish problems, with worries about contagion uppermost in their minds. David Madden, market analyst at CMC Markets UK, says: | |
| European stock markets have been rocked by the plunge in the Turkish lira. The European Central Bank (ECB) warned that a number of eurozone banks might be exposed to the sharp decline in the Turkish lira. | |
| A number of Spanish, French and Italian banks are connected to Turkey in the form of foreign denominated loans, and if the Turkish borrowers haven’t hedged their exposure it might spark defaults. Should European banks incur write-downs on account of the Turkish currency crisis, investment sentiment is likely to be weak. Many financial institutions in Europe have their own non-performing loans to contend with, and they could be facing a similar situation in Turkey. | |
| Reuters’ Jamie McGeever has put today’s fall in the Turkish lira into context: | Reuters’ Jamie McGeever has put today’s fall in the Turkish lira into context: |
| Turkish lira having one of the biggest one-day falls of any free-floating currency in over 20 years. Now down 14%, but was off as much as 20% earlier today. For comparison:Indonesian rupiah -15% on 6 May, 1998S African rand -15% on 15 Oct, 2008UK pound -8% on 24 June, 2016 | Turkish lira having one of the biggest one-day falls of any free-floating currency in over 20 years. Now down 14%, but was off as much as 20% earlier today. For comparison:Indonesian rupiah -15% on 6 May, 1998S African rand -15% on 15 Oct, 2008UK pound -8% on 24 June, 2016 |
| Here’s Bloomberg’s energy editor on Turkish steel exports, which will now be hit by the new Trump tariffs: | Here’s Bloomberg’s energy editor on Turkish steel exports, which will now be hit by the new Trump tariffs: |
| #Turkey's #steel exports to the US fell by more than half in the first five months of 2018. They'd hoped to make back that ground. That now looks unlikely https://t.co/gy5R5wJTOL via @tbiesheuvel #Tradewars pic.twitter.com/BfPfhjVEET | #Turkey's #steel exports to the US fell by more than half in the first five months of 2018. They'd hoped to make back that ground. That now looks unlikely https://t.co/gy5R5wJTOL via @tbiesheuvel #Tradewars pic.twitter.com/BfPfhjVEET |
| Erdogan is now repeating his previous pleas to buy lira: | Erdogan is now repeating his previous pleas to buy lira: |
| Erdogan again calling on Turkish citizen to buy Lira and sell foreign currencies... | Erdogan again calling on Turkish citizen to buy Lira and sell foreign currencies... |
| ERDOGAN: TURKEY ECONOMY TO GROW AT RECORD LEVEL IN 2018(just not in US dollar terms) | ERDOGAN: TURKEY ECONOMY TO GROW AT RECORD LEVEL IN 2018(just not in US dollar terms) |
| The situation for Turkey looks bleak and it is entirely of its own making, says Jan Dehn, head of research at investment manager Ashmore Group: | The situation for Turkey looks bleak and it is entirely of its own making, says Jan Dehn, head of research at investment manager Ashmore Group: |
| The situation unfolding in Turkey is fluid, but essentially unsurprising. Any emerging market investor who has done even a modicum of due diligence will be aware of the monetary policy problems Turkey has been running for years. President Erdogan’s consistent pressure on the central bank to keep interest rates low – a product of his erroneous belief that high interest rates lead to inflation – has brought Turkey’s macroeconomic situation into serious imbalance, hence placing the country in a vulnerable position. The chickens have now come home to roost. | The situation unfolding in Turkey is fluid, but essentially unsurprising. Any emerging market investor who has done even a modicum of due diligence will be aware of the monetary policy problems Turkey has been running for years. President Erdogan’s consistent pressure on the central bank to keep interest rates low – a product of his erroneous belief that high interest rates lead to inflation – has brought Turkey’s macroeconomic situation into serious imbalance, hence placing the country in a vulnerable position. The chickens have now come home to roost. |
| US President Donald Trump has, in typical fashion, wasted no time in exploiting a minor diplomatic spat over an American pastor jailed in Turkey to add insult to Turkey’s largely self-inflicted injuries by slapping tariffs on Turkey – which will further exacerbate today’s slide. | US President Donald Trump has, in typical fashion, wasted no time in exploiting a minor diplomatic spat over an American pastor jailed in Turkey to add insult to Turkey’s largely self-inflicted injuries by slapping tariffs on Turkey – which will further exacerbate today’s slide. |
| The outlook for Turkey from here remains bleak. Ten years of macroeconomic mismanagement will take a long time to fix even if Turkey begins to follow sensible economic policies from here on out. A recession, and possibly a banking crisis, now look extremely likely. Does Erdogan understand how serious the situation has become? Does he suffer from the ‘dictator problem’, in which his advisers are scared to give him bad news and prudent advice? One thing seems clear now: if Erdogan continues to blame ‘the economic war’ and the ‘interest rate lobby’ then the outlook is even more complicated and any macroeconomic improvement less plausible. | The outlook for Turkey from here remains bleak. Ten years of macroeconomic mismanagement will take a long time to fix even if Turkey begins to follow sensible economic policies from here on out. A recession, and possibly a banking crisis, now look extremely likely. Does Erdogan understand how serious the situation has become? Does he suffer from the ‘dictator problem’, in which his advisers are scared to give him bad news and prudent advice? One thing seems clear now: if Erdogan continues to blame ‘the economic war’ and the ‘interest rate lobby’ then the outlook is even more complicated and any macroeconomic improvement less plausible. |
| We remain underweight Turkey as we have done for some time, but it’s important to remember that this is almost entirely a self-inflicted Turkish issue. No other emerging market country has a president who believes higher rates cause inflation. Investor sentiment towards EM more widely can temporary weaken, which is normal in periods of risk aversion, but such price action is not justified. If asset prices decline in other EMs just because Turkey does not have its house in order this should be viewed as a buying opportunity and exploited ruthlessly. | We remain underweight Turkey as we have done for some time, but it’s important to remember that this is almost entirely a self-inflicted Turkish issue. No other emerging market country has a president who believes higher rates cause inflation. Investor sentiment towards EM more widely can temporary weaken, which is normal in periods of risk aversion, but such price action is not justified. If asset prices decline in other EMs just because Turkey does not have its house in order this should be viewed as a buying opportunity and exploited ruthlessly. |
| Earlier Turkey’s finance minister - and Erdogan’s son-in-law had also tried to ease fears about the country’s economy, including concerns about the central bank’s independence. Associated Press reports: | Earlier Turkey’s finance minister - and Erdogan’s son-in-law had also tried to ease fears about the country’s economy, including concerns about the central bank’s independence. Associated Press reports: |
| In a bid to ease investor concerns about Turkey’s economic policy, the country’s finance minister says the government will safeguard the independence of the central bank. | In a bid to ease investor concerns about Turkey’s economic policy, the country’s finance minister says the government will safeguard the independence of the central bank. |
| Treasury and Finance Minister Berat Albayrak on Friday also vowed sustainable and healthy economic growth as well as “strong struggle” against inflation, which currently stands at close to 16 percent. | Treasury and Finance Minister Berat Albayrak on Friday also vowed sustainable and healthy economic growth as well as “strong struggle” against inflation, which currently stands at close to 16 percent. |
| Albayrak was speaking at a conference where he outlined his ministry’s “new economic policy” as the currency plunged, raising questions about the country’s financial stability. | Albayrak was speaking at a conference where he outlined his ministry’s “new economic policy” as the currency plunged, raising questions about the country’s financial stability. |
| He said: “One of our principles will be ensuring the full independence of monetary policy.” | He said: “One of our principles will be ensuring the full independence of monetary policy.” |
| Investors are worried about the president’s unorthodox economic policies, pressure exerted on the central bank, and a dispute with the United States that has led to sanctions. | Investors are worried about the president’s unorthodox economic policies, pressure exerted on the central bank, and a dispute with the United States that has led to sanctions. |
| Before his second speech and after Donald Trump’s speech, Erdogan was reportedly in contact with Russia: | Before his second speech and after Donald Trump’s speech, Erdogan was reportedly in contact with Russia: |
| BREAKING: Turkey says President Erdogan has held phone call with Russia's Putin to discuss economic ties amid market turmoil. | BREAKING: Turkey says President Erdogan has held phone call with Russia's Putin to discuss economic ties amid market turmoil. |
| Erdogan is practically goading the market into an 8 handle next week https://t.co/2Al06JaWBW | Erdogan is practically goading the market into an 8 handle next week https://t.co/2Al06JaWBW |
| Turkish president Erdogan is making a second speech at the moment. | Turkish president Erdogan is making a second speech at the moment. |
| #Erdogan 2nd speech of the day...will he say anything to steady investor's nerves? This as the Lira continues to plummet & contagion ramps up in Europe pic.twitter.com/waNliQcdsf | #Erdogan 2nd speech of the day...will he say anything to steady investor's nerves? This as the Lira continues to plummet & contagion ramps up in Europe pic.twitter.com/waNliQcdsf |
| He is currently talking about infrastructure spending, including better roads and tunnels. | He is currently talking about infrastructure spending, including better roads and tunnels. |
| He says forget the lira, forget currencies and talks about being in love with the Turkish people. | He says forget the lira, forget currencies and talks about being in love with the Turkish people. |
| Neil Wilson, chief market analyst at Markets.com, also sees echoes of the Greek troubles: | Neil Wilson, chief market analyst at Markets.com, also sees echoes of the Greek troubles: |
| If you’re looking for a black swan event, this could be it, although we must stress that so the panic is very much confined to Turkey. Nevertheless, ghosts of Greece are still vivid in the memory for European investors and today is the first sign that the problem with Turkey’s larger dollar debts is no longer confined to its borders. | If you’re looking for a black swan event, this could be it, although we must stress that so the panic is very much confined to Turkey. Nevertheless, ghosts of Greece are still vivid in the memory for European investors and today is the first sign that the problem with Turkey’s larger dollar debts is no longer confined to its borders. |
| Three summers ago, Greece was forced to impose capital controls to prevent a run on its banks, as its future in the eurozone hung in the balance. | Three summers ago, Greece was forced to impose capital controls to prevent a run on its banks, as its future in the eurozone hung in the balance. |
| Gavin Friend, senior market strategist at National Australia Bank, believes Turkey could soon be forced into similar measures: | Gavin Friend, senior market strategist at National Australia Bank, believes Turkey could soon be forced into similar measures: |
| “Though hiking rates would be the market’s preferred option for Turkey to stem this crisis and help deal with inflation this seems unlikely given what we heard from President Erdogan today. | “Though hiking rates would be the market’s preferred option for Turkey to stem this crisis and help deal with inflation this seems unlikely given what we heard from President Erdogan today. |
| If we assume IMF assistance is out of the question from both sides, that leaves capital controls. That is problematic given Turkey’s need for foreign inflows - but of course they won’t be coming for now and stemming the flow the other way is the issue. This won’t help in building trust between Turkey and international investors. | If we assume IMF assistance is out of the question from both sides, that leaves capital controls. That is problematic given Turkey’s need for foreign inflows - but of course they won’t be coming for now and stemming the flow the other way is the issue. This won’t help in building trust between Turkey and international investors. |
| Paul McNamara, investment director at asset management firm GAM, has written a fine explanation of the causes of Turkey’s economic woes: | Paul McNamara, investment director at asset management firm GAM, has written a fine explanation of the causes of Turkey’s economic woes: |
| “We think that Turkey has a toxic combination of a weak external position (current account deficit), excessive private sector debt and a high level of foreign funding in the banking system. This is coming to a head as a much-needed demand slowdown is causing asset quality problems in the banks. The role of construction in the economy for example is comparable with that in Spain or Ireland ahead of the European bust. | “We think that Turkey has a toxic combination of a weak external position (current account deficit), excessive private sector debt and a high level of foreign funding in the banking system. This is coming to a head as a much-needed demand slowdown is causing asset quality problems in the banks. The role of construction in the economy for example is comparable with that in Spain or Ireland ahead of the European bust. |
| “We think the Turks have exhausted the possibilities of rate hikes, and are backed into a corner by their inadequate level of currency reserves (the IMF thinks that Turkey has the least adequate level of reserves of the major EM economies. The country’s politics are also a problem with the President’s son-in-law as Finance Minister and perception of political interference with the “independent” Central Bank. | “We think the Turks have exhausted the possibilities of rate hikes, and are backed into a corner by their inadequate level of currency reserves (the IMF thinks that Turkey has the least adequate level of reserves of the major EM economies. The country’s politics are also a problem with the President’s son-in-law as Finance Minister and perception of political interference with the “independent” Central Bank. |
| “Today’s developments have been very negative: President Erdogan made a belligerent speech with no reference to the need of a change of course. Finance Minister Albayrak made a content-free speech full of consultant platitudes. Finally, US President Trump doubled tariffs on Turkish metal exports – this is likely symbolic, but symbolising a lack of US support for the Ankara regime. | “Today’s developments have been very negative: President Erdogan made a belligerent speech with no reference to the need of a change of course. Finance Minister Albayrak made a content-free speech full of consultant platitudes. Finally, US President Trump doubled tariffs on Turkish metal exports – this is likely symbolic, but symbolising a lack of US support for the Ankara regime. |
| “Our strongly-held negative view on Turkey remains intact and we have not covered any risk.” | “Our strongly-held negative view on Turkey remains intact and we have not covered any risk.” |
| Turkey’s deepening currency crisis is sending fear sweeping through the financial markets. | Turkey’s deepening currency crisis is sending fear sweeping through the financial markets. |
| All the main European stock markets are in the red, led by financial shares. | All the main European stock markets are in the red, led by financial shares. |
| Italy’s benchmark stock index has sunk by 3% today. Germany’s DAX has shed 2%, while Britain’s FTSE 100 is down 60 points, or 0.8%. | Italy’s benchmark stock index has sunk by 3% today. Germany’s DAX has shed 2%, while Britain’s FTSE 100 is down 60 points, or 0.8%. |
| Several European banks have significant operations in Turkey, such as Spain’s BBVA, Italy’s UniCredit and France’s BNP Paribas. | Several European banks have significant operations in Turkey, such as Spain’s BBVA, Italy’s UniCredit and France’s BNP Paribas. |
| Unicredit’s shares have fallen by 5.6%, closely followed by BBVA (-5.4%) Deutsche Bank (-5.3%), ING (-5%) and BNP Paribas (-4.2%) | Unicredit’s shares have fallen by 5.6%, closely followed by BBVA (-5.4%) Deutsche Bank (-5.3%), ING (-5%) and BNP Paribas (-4.2%) |
| According to the Financial Times, the European Central Bank is worried that Turkish borrowers might not be hedged against the lira’s weakness and begin to default on foreign currency loans. | According to the Financial Times, the European Central Bank is worried that Turkish borrowers might not be hedged against the lira’s weakness and begin to default on foreign currency loans. |
| Those loans make up about 40% of the Turkish banking sector’s assets, and are now a lot more expensive to repay following the lira’s tumble. | Those loans make up about 40% of the Turkish banking sector’s assets, and are now a lot more expensive to repay following the lira’s tumble. |
| #Turkey Lira hits new low as Trump increases tariffs. pic.twitter.com/xVrlQ7a1D5 | #Turkey Lira hits new low as Trump increases tariffs. pic.twitter.com/xVrlQ7a1D5 |
| Turkey’s currency crisis could force president Erdogan to impose capital controls, or seek help from the International Monetary Fund, says Brad Bechtel of investment bank Jefferies: | Turkey’s currency crisis could force president Erdogan to impose capital controls, or seek help from the International Monetary Fund, says Brad Bechtel of investment bank Jefferies: |
| Turkey has a handful of options including seeking an IMF program, capital controls, rate hikes, yield to American demands or do nothing and so far the only option he seems to be leaning towards is do nothing. | Turkey has a handful of options including seeking an IMF program, capital controls, rate hikes, yield to American demands or do nothing and so far the only option he seems to be leaning towards is do nothing. |
| His stubborn stance against the US and twisted view of the IMF combined with a fear of higher interest rates make the situation untenable. The complete loss of credibility in the central bank was the final shoe to drop and spark for the latest rout we’ve seen in the currency. Until decisive action is taken, they will continue to spiral out of control. | His stubborn stance against the US and twisted view of the IMF combined with a fear of higher interest rates make the situation untenable. The complete loss of credibility in the central bank was the final shoe to drop and spark for the latest rout we’ve seen in the currency. Until decisive action is taken, they will continue to spiral out of control. |
| Turkey is now suffering one of the most painful and intense currency crises in many years: | Turkey is now suffering one of the most painful and intense currency crises in many years: |
| Hold on to your hats!Turkish lira 19% down Vs USD on the day at the US open. | Hold on to your hats!Turkish lira 19% down Vs USD on the day at the US open. |
| Lira is down 46% against the dollar in the past 52 weeks. It gets worst faster than I can update the chart. pic.twitter.com/0fcO6luOAi | Lira is down 46% against the dollar in the past 52 weeks. It gets worst faster than I can update the chart. pic.twitter.com/0fcO6luOAi |
| The Turkish lira is plunging to new record lows following Donald Trump’s tweet. | The Turkish lira is plunging to new record lows following Donald Trump’s tweet. |
| It’s now down 18% (!!) today, at over 6.5 lira to the dollar, compared with 5.5 lira last night. | It’s now down 18% (!!) today, at over 6.5 lira to the dollar, compared with 5.5 lira last night. |
| That means the currency has lost nearly a third of its value this week. A truly shocking plunge, suggesting Turkey’s economy is getting into serious trouble. | That means the currency has lost nearly a third of its value this week. A truly shocking plunge, suggesting Turkey’s economy is getting into serious trouble. |
| Select Developing Market Currency Performance, YTD: (Turkey now performing worse than Argentina) pic.twitter.com/iimmYQj88d | Select Developing Market Currency Performance, YTD: (Turkey now performing worse than Argentina) pic.twitter.com/iimmYQj88d |
| NEWSFLASH: Donald Trump has announced he’s doubling the tariffs on Turkish steel and aluminium imports, as the diplomatic row between Turkey and the US deepens. | NEWSFLASH: Donald Trump has announced he’s doubling the tariffs on Turkish steel and aluminium imports, as the diplomatic row between Turkey and the US deepens. |
| Trump announced the move in a tweet, claiming it was in response to the lira’s recent slump. | Trump announced the move in a tweet, claiming it was in response to the lira’s recent slump. |
| I have just authorized a doubling of Tariffs on Steel and Aluminum with respect to Turkey as their currency, the Turkish Lira, slides rapidly downward against our very strong Dollar! Aluminum will now be 20% and Steel 50%. Our relations with Turkey are not good at this time! | I have just authorized a doubling of Tariffs on Steel and Aluminum with respect to Turkey as their currency, the Turkish Lira, slides rapidly downward against our very strong Dollar! Aluminum will now be 20% and Steel 50%. Our relations with Turkey are not good at this time! |
| This further intensifies the battle between the two countries over US pastor Andrew Brunson, who is currently imprisoned over terrorism charges. | This further intensifies the battle between the two countries over US pastor Andrew Brunson, who is currently imprisoned over terrorism charges. |
| The moves comes shortly after Turkey’s president claimed there was a campaign to harm Turkey by weakening the lira. | The moves comes shortly after Turkey’s president claimed there was a campaign to harm Turkey by weakening the lira. |
| Trump’s move has sent the lira sliding deeper into trouble. It’s now down almost 14% today at 6.3 lira to the dollar (a month ago it traded at 4.8). | Trump’s move has sent the lira sliding deeper into trouble. It’s now down almost 14% today at 6.3 lira to the dollar (a month ago it traded at 4.8). |
| Turkish Lira extends drop to more than 11% as Trump hits the country with higher metals tariffs https://t.co/4aDHUCbkdr pic.twitter.com/nSONeyEafD | Turkish Lira extends drop to more than 11% as Trump hits the country with higher metals tariffs https://t.co/4aDHUCbkdr pic.twitter.com/nSONeyEafD |
| Turkey’s currency crisis has deepened today, as president Erdogan attempting to calm the situation with a defiant address to the nation. | Turkey’s currency crisis has deepened today, as president Erdogan attempting to calm the situation with a defiant address to the nation. |
| After watching the lira fall to record lows in recent days, Erdogan declared that Turkey is facing an “economic war’, which he vowed not to lose. | After watching the lira fall to record lows in recent days, Erdogan declared that Turkey is facing an “economic war’, which he vowed not to lose. |
| Erdogan also urged Turkish citizens to help, by swapping any foreign currency for lira to help stem its losses. | Erdogan also urged Turkish citizens to help, by swapping any foreign currency for lira to help stem its losses. |
| If there’s anyone who has dollars, gold or euros under their pillow, I am asking them to take them to the bank and exchange them for Turkish lira. | If there’s anyone who has dollars, gold or euros under their pillow, I am asking them to take them to the bank and exchange them for Turkish lira. |
| Erdogan highlights...- Interest rate lobby won't crush Turkey- Let's retake city squares to repel economic attack- We'll smash this plot against country- Let no one doubt our success- Take our money from under mattress and put in bank(Watch here: https://t.co/2N0nQdxdTj pic.twitter.com/b4hXJ3858O | Erdogan highlights...- Interest rate lobby won't crush Turkey- Let's retake city squares to repel economic attack- We'll smash this plot against country- Let no one doubt our success- Take our money from under mattress and put in bank(Watch here: https://t.co/2N0nQdxdTj pic.twitter.com/b4hXJ3858O |
| Erdogan is asking citizens again to take their dollars and euros and convert them to liras. A visit to bank branches in Istanbul today indicated that the opposite is happening https://t.co/oudSCQobEZ pic.twitter.com/YVMk5dHEVO | Erdogan is asking citizens again to take their dollars and euros and convert them to liras. A visit to bank branches in Istanbul today indicated that the opposite is happening https://t.co/oudSCQobEZ pic.twitter.com/YVMk5dHEVO |
| Turkish assets have been slumping in recent days, for several reasons | Turkish assets have been slumping in recent days, for several reasons |
| 1) A standoff with the U.S. over a detained American pastor that Turkey, a NATO ally, has put on trial for espionage and terror-related charges linked to a failed coup attempt in the country two years ago. Washington has imposed financial sanctions on two Turkish ministers and warned of additional measures unless the pastor is released | 1) A standoff with the U.S. over a detained American pastor that Turkey, a NATO ally, has put on trial for espionage and terror-related charges linked to a failed coup attempt in the country two years ago. Washington has imposed financial sanctions on two Turkish ministers and warned of additional measures unless the pastor is released |
| 2) Investors are worried about the Erdogan’s economic policies since his election win in June. He has long pushed the Turkish central banks to cut interest rates, claiming this would lower inflation (most economists take the opposite view). | 2) Investors are worried about the Erdogan’s economic policies since his election win in June. He has long pushed the Turkish central banks to cut interest rates, claiming this would lower inflation (most economists take the opposite view). |
| The lira has slumped by around 10% today, extending yesterday’s deep losses. | The lira has slumped by around 10% today, extending yesterday’s deep losses. |
| Paul Greer, portfolio manager at Fidelity International, argues that Turkey actually needs a massive interest rate hike of perhaps 10 percentage points, to restore market confidence. | Paul Greer, portfolio manager at Fidelity International, argues that Turkey actually needs a massive interest rate hike of perhaps 10 percentage points, to restore market confidence. |
| However, such a move would also probably drag Turkey into recession. | However, such a move would also probably drag Turkey into recession. |
| Greer says: | Greer says: |
| “Turkey’s macro challenges are numerous and well known - an overheating economy, a sizable external financing requirement, an outsized structural current account deficit, persistent double digit inflation, low net FX reserves and a large private sector debt burden. As a result of this, investor confidence in President Erdogan’s regime has been waning for much of the past year but key cabinet changes made after the June 24th elections have been particularly damaging for sentiment..... | “Turkey’s macro challenges are numerous and well known - an overheating economy, a sizable external financing requirement, an outsized structural current account deficit, persistent double digit inflation, low net FX reserves and a large private sector debt burden. As a result of this, investor confidence in President Erdogan’s regime has been waning for much of the past year but key cabinet changes made after the June 24th elections have been particularly damaging for sentiment..... |
| “While Turkey’s fundamental challenges are numerous, there are plenty of straightforward textbook solutions which, if implemented, can halt the downward spiral of investor confidence and asset prices. An aggressive interest rate hike from the Central Bank would be a good start, something of the order of +1,000bp that Argentina delivered back in May would be appropriate at this juncture. This would help slow the economy, probably into a recession, which would help crunch the relentless demand for imports and thereby alleviate some of the current account deficit problem. | “While Turkey’s fundamental challenges are numerous, there are plenty of straightforward textbook solutions which, if implemented, can halt the downward spiral of investor confidence and asset prices. An aggressive interest rate hike from the Central Bank would be a good start, something of the order of +1,000bp that Argentina delivered back in May would be appropriate at this juncture. This would help slow the economy, probably into a recession, which would help crunch the relentless demand for imports and thereby alleviate some of the current account deficit problem. |