Turkey’s lira and the Sri Lankan Rupee have one thing in common both currencies have lost value. The Lira has lost nearly a quarter of its value this year.
As it happened in Sri Lanka inflation is soaring and for a long time, Turkey’s central bank was reluctant to ‘ raise interest rates.
Turkey has long been considered among the riskier emerging markets, running large current-account deficits and relying on external financing to fuel unorthodox pro-growth policies.
Similar to Sri Lanka s’ monetary policymakers Turkey’s President Erdogan has been very unorthodox and a risk-taker.
Currently, the Turkish central bank is keeping the interest rate at 14 percent while inflation is running at more than 70 percent.
While other countries with much lower inflation rates choose to increase interest rates, the Turkish government believes it is possible to grow the economy and keep interest rates low,
Sri Lanka’s Prime minister Ranil Wickramasinha and Turkey’s President Erdogan have both announced setting up financial safety nets to provide social security support to the needy.
As the Rajapaksha brothers did in Sri Lanka Erdagon and his clan micro-managed the economy.