Someone got to Erdogan. Before the election that gave him another five years in power in May, he insisted on low interest rates even though they were helping drive Turkish inflation towards 60 percent. He fired four central bank chiefs in as many years rather than listen to economic orthodoxy. But in the past three months he had quietly accepted it and let Hafize Gaye Erkan, a former Wall Street banker and Turkey’s first woman central bank chief, raise rates repeatedly and in one case by 75 basis points in one go – three times the hike analysts were expecting – to 25 per cent. Investors are paying attention. The FT has logged $1.3 billion in new sales of dollar-denominated Turkish bonds and Turkey’s finance minister will launch an investor roadshow at Goldman Sachs’ New York headquarters later this month. Analysts say rates could go as high as 35 per cent. Istanbul: the new place for your savings.
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