"How can a country where the entire market cap of Turkish equities traded on the Istanbul Stock exchange is less than the market cap of Netflix wreak such havoc? It is all about the direct and indirect impacts," wrote Katie Nixon, chief investment officer for wealth management at Northern Trust. "There are certain emerging market countries with relatively weak currencies and a heavy reliance on external (predominately dollar based) financing. The fear is that what happens in Turkey won't stay in Turkey."
"We sense the confusion; there is very real concern being effected globally and things are going rather badly awry," Dennis Gartman wrote Monday in his daily Gartman Letter.
As he pointed out, the currency crisis is being exacerbated by tensions with U.S. President Donald Trump, who recently announced his intention to ramp up tariffs against Turkey while it detains U.S. pastor Andrew Brunson.
Trump's move helped sink the Turkish lira even more, while the currency has tumbled amid a series of questionable fiscal and monetary decisions by President Recep Tayyip Erdogan. A series of interest rate hikes engineered by the government has failed to stem the lira's plunge.
The lira was off more than 8 percent against the dollar in Monday trading, steepening the nation's currency woes. Emerging market currencies also were weaker across the board.
Reference: CNBC
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