Earlier this week, we dubbed Turkey’s unprecedented, bizarre intervention in the FX market Erdogan’s “Whatever it takes” moment in homage to Mario Draghi’s similar deus ex machina, and according to a Reuters report, this is more or less exactly what happened.
As a reminder, almost a decade ago when the euro was collapsing and was widely viewed as reaching parity with the dollar in the near future, then-ECB president Mario Draghi unveiled his “whatever it takes” pledge to keep the Eurozone from falling apart due to the extreme widening of sovereign spread during the debt crisis. Indeed, even though Draghi’s words birthed the OMT facility, the ECB has never had to invoke it.
Now, according to Reuters, something similar took place late last week when the Turkish lira was cratering every single day in response to Erdogan’s crazy economic theories (where lowering rates is somehow expected to reduce inflation). It was then that Turkey’s Treasury was working on “an ambitious but risky plan” to reverse a crash in the currency that would only be launched if it crossed the “absurd” threshold of 18 to the dollar, according to four people with knowledge of discussions, a threshold which was reached just days later…
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