Paul Mcnamara on the Problem With Turkey, and the Attempt To Save the Lira
Odd Lots
Bloomberg
4.5 • 2K Ratings
🗓️ 17 January 2022
⏱️ 41 minutes
🧾️ Download transcript
Summary
Near the end of 2021, Turkey's government undertook a bold measure to stabilize the lira after the currency got clobbered throughout much of the year. The basic idea is that the government would pay savers to lock up their currency in lira, and compensate them if it fell too far against the dollar. But can it work? Does it address the core problem of the Turkish economy? To understand more, and to get the perspective of outside investors, we speak with Paul McNamara, a fund manager at GAM and a veteran EM watcher, to get a handle on the government's new measure, the challenges with it, and why Turkey is prone to so much volatility.
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| 0:54.3 | Hello and welcome to another episode of the Adlots podcast. |
| 0:59.1 | I'm Joe Wiesenthal. Unfortunately, my colleague Tracy Alloy is out today, so it will just be me, |
| 1:06.8 | but I'm very excited nonetheless about this episode because we are going to continue speaking |
| 1:12.5 | about what of the more interesting and complicated, at least seems complicated, |
| 1:17.8 | stories developing right now in markets, and that is the situation in Turkey. |
| 1:22.9 | And if you haven't already, a couple of weeks ago, we published an episode with the economist, |
| 1:29.2 | Littfilabingo, based in a bank, in Istanbul, basically walking through some of the measures |
| 1:37.6 | that the Erdogan government has taken recently to stabilize the Lira. And of course, |
| 1:43.3 | the Lira had a pretty terrible 2021. It feels like, as we said, on that episode that every nine |
| 1:50.8 | months, every year, every year and a half, there's a pretty big episode in Turkey where the currency |
| 1:56.1 | plunges and the government engages in seemingly unorthodox monetary policy. Nonetheless, none of it |
| 2:04.6 | seems to have worked. Inflation is extremely high. And so the argument or the attempt by the government |
| 2:12.0 | is to discourage domestic savers from moving their money into into dollars and to hold their money |
| 2:19.3 | in Lira. So far, you know, this has been a goal for a while. Turkey is a heavily dollarized |
| 2:25.2 | economy. By and large, though, nothing has, has worked. So I would encourage people to listen to |
| 2:31.4 | that episode for a discussion of the mechanics. But of course, anything new is bound to be very |
| 2:36.6 | controversial. And there's a lot of views and a lot of skepticism about whether anything |
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