The purge

Erdogan’s removal of another central bank governor and the resignation of his son-in-law from the finance ministry points to a significant change in view at the heart of government. This isn’t some voluntary awakening, instead it’s a function of mounting pressure on the currency and dwindling resources to manage it. Providing the central bank is given a free hand to try and sort out the mess — i.e. allowed to hike rates — this purge should lead to a steadier lira. After falling 25% we close our short lira position versus the euro.

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