>> Turkey's economy buckling under the weight of a troublesome year. Political instability, multiple devastating militant attacks, the war in Syria on its doorstep, and a failed coup, sapping its already vulnerable markets, and tanking the Lira. The Turkish currency has tumbled over a quarter of its worth against the dollar since that July coup to a record low, making it the worst performing major currency in the world.
The country, now in the middle of it's first economic contraction in seven years. Some investment groups calling for its central bank to raise interest rates in response, a strategy President Tayyip Erdogan is unlikely to endorse. Reuters Istanbul Bureau Chief, Nick Tattersall.>> He believes that high borrowing costs are a crimp on investment, that they prevent spending on things like infrastructure, and he wants to see borrowing costs, interest rates, lower.
He's even equated high interest rates, and those who call for them, with treason.>> Compounding matters, parts of Turkish life are pegged to the dollar such as school costs and rent, the split causing a spike in cost of living. The economic slow down may also effect an upcoming constitutional referendum aimed at handing Erdogan far greater presidential powers.
>> The expectation in the markets is that the eventually the Central Bank will simply have to hike interest rates, otherwise it's hard to see how it's gonna control the falling Lira. The question then is whether it hikes sharply enough to put an end to this Lira route, or whether it's gonna find itself in the same position in a matter of months or weeks after that.
>> The Central Bank has announced it would release $1.5 billion in an effort to jump-start the system. Investors say it's a stop-gap measure