After a brief lull, everything seems to indicate that the financial markets will once again focus on Turkey. The Turkish crisis is already giving its political consequences with Turkey, a member of NATO and an active player in the weak balance of the Middle East, which is gradually moving away from the US and increasingly closer to Russia. As a culmination of all this, the trade war (with announcements and reprisals from each side) that has accentuated the imbalances of the Turkish economy, overheated by excessive growth and with inflation at 15%. Erdogan, who in the last elections has strengthened his power and especially his control over the economy, should raise interest rates drastically. But it doesn’t.
This weekend, the two large rating agencies, Standard & Poor’s and Moody’s, have lowered the rating of Turkish debt (long-term in foreign currency from BB- to B +, and long-term in local currency from BB -a BB.). The market, therefore, expects new threats from the United States, so they will not consider the crisis over.
This crisis can spread to other emerging markets, among which the most prominent is Argentina, which many analysts already see in recession, or Venezuela, which this weekend has devalued its currency by 95.8%. The president of Venezuela, Nicolás Maduro, announced last Friday that the new denomination of the national currency that will take effect today, Monday, August 20, the sovereign bolivar, will be anchored to the petro (which is what the government cryptocurrency is called), and this in turn has a “swing value of $ 60 or more.”
But in addition, the Venezuelan president indicated that each petro will have a value of 3,600 sovereign bolivars or 360 million current, which gives a resulting change of 6,000,000 bolivars per dollar. Even in the absence of all the details, which will be announced in the coming days, various economists have warned that the little that is known implies that the government devalued the national currency by 95.8%, since a dollar will go from cost 248,832 to 6,000 .000 bolivars.
The question is, will all this alleviate the hyperinflation that plagues the oil country, which according to IMF calculations will reach 1 million percent this year?