New Delhi, India: Financial markets continue to be rattled by the Economy Crisis in Turkey. The country's currency had plunged to record low against the US Dollar, which had already prompted Turkish Central Bank to take measures. Turkish Central Bank had been trying a lot to make this from becoming a worse crisis but Does President Recep Tayyip Erdogan has the potential to overcome?. The proximate cause of Emerging Market Weakness is the Reduction of Dollars.
The effect of declining Lira can be seen in South African markets. The proximate cause of this emerging market weakness and contagion has been the Economic Crisis in Turkey. The major of the problem is due to the reduction of dollars being supplied into the system, the end of quantitative easing when the global markets were flooded with cheap and free dollars, which led to the excitement among the people particularly across the emerging and frontier markets.
But after the whiplash turn of the dollar, the story turns into the same loop, stepping out of the comfort market trends. The major reason for whiplash is still unclear as of now, it can be when the dollar which is being weaponized whether it is deliberate or by the design. Moreover, the reprise of the dollar in Turkey has now spilled over into other markets including Asia-Pacific markets.
The dollar in the past has been seen kneecapping the countries and President Recep Tayyip Erdogan is the first one to lose his kneecaps. President of the United States, Donald Trump is wielding something much powerful than a nuclear weapon, that is reducing the supply of dollars in the financial markets. This might not be the accurate reason for the Lira Crisis but at least the proximate cause of emerging market weakness could be the weaponizing the US Dollar, deliberately or by design, which is still unclear.
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