The headline may be a bad pun, but the warning is serious. Many people believe that the trouble with Turkey’s currency is confined to that country, but that is far from the case. Turkey is just the first country that implemented populist policies when the going was good to now pay for these policies. The markets are about to teach populists a lesson, and Turkey is the first instalment.
For emerging markets currencies, 2015 is shaping up to be a challenging year.
Yes, the falling price of oil is helping some countries that were until recently vulnerable. But for many others, the end of the Federal Reserve’s easy money will spell the beginning of a much more volatile period.