im looking at a put on $tur, this is a good summary of the situation: The Economist Podcasts - You bet your dollar-bottomed: Erdogan’s next gambit on Stitcher
Thanks for brining this to our attention! I’ll take a listen to that podcast and see if I can find some more news on the situation in Turkey.
Compiling some notes from @vex
- the government has kept interest rates very low despite high inflation
- all of macroeconomic theory indicates that’s going to lead to more inflation
- lower interest rates = cheaper money = more money flow = inflation
- as inflation goes up, their economy gets weaker
- the central bank can get caught into a cycle of printing and printing
- we can’t buy puts on the currency itself, but we can buy puts on TUR. it is a mutual fund that invests broadly in the turkish economy
- this is a quote from a Turkish local that was aired on a podcast by the economist magazine, “in the evening bread costs four liras and then, in the morning, it is seven”
- they recently instituted a 50% increase on the minimum wage, which will further drive inflation (more people with more money shrinks the buying power of each lira). it is important to pair this with the fact that the president said he would keep interest rates low
Additionally, Turkey’s economy is one of the most prolific producers of hazelnuts and the inflation issue in turkey is set to create a shortage of hazelnuts that will impact producers like Nutella and Ferrero Rocher.