It came to the eye of the storm again. On March 28, the prices of Turkish lira and government bonds were hit hard again. As of press time, the exchange rate of Turkish lira against the US dollar fell to 5.64.

Turkish lira , which triggered a storm in emerging markets in 2018, came to the eye of the storm again. On March 28, the prices of Turkish lira and government bonds were hit hard again. As of press time, the exchange rate of Turkish lira against the US dollar fell to 5.64, and Turkish 10-year government bond yield rose from 18.21% on Wednesday to 19.12%, the highest level this year. At the same time, in the afternoon, the US dollar index rose in the short term, once rising above the 97 mark, and driving emerging market currencies to lower.

And on the evening of the 27th, the Turkish stock exchange rate had begun to fall collectively, and the Turkish stock index closed down 5.7%, the largest daily decline since July 2016. The stock index ISE National once plummeted 7%, a new low since August last year, smoothing out all gains since January. For example, the Turkish Bank Index once fell more than 8% during the session, and it was a fourth consecutive decline. During this period, JPMorgan Chase released a bearish Turkish lira report, suggesting investors to go long USD/ lira . The fuse of the sharp fluctuation of Turkish stock exchanges due to

was that Turkey's US dollar foreign exchange reserves have dropped sharply since March, with a drop of 6.7% in two weeks (as of March 27, Turkey's net foreign exchange reserves were US$28.6 billion), which has caused concerns about the Turkish financial market. In order to prevent the Turkish lira from depreciating again, the Turkish central bank has raised the interbank lending rate to reduce the short-selling power of the lira, which shows that the Turkish central bank is cutting foreign exchange reserves to inject funds into the financial market rather than through market financing.

In fact, it is not difficult for readers who often read BWC Chinese articles to see that the biggest root cause of the continuous depreciation of the Turkish lira lies in the dollar shortage (the rising US dollar interest rate is one of the fundamental reasons for the continuous return of the US dollar to the US market) and its own economic characteristics (high structural deficits, high inflation and high debt). At this time, as long as there is a slight "turbulence" in the external economic environment (such as the rise in the US dollar index, the inverted yields of US Treasury in each period caused an intensified economic concerns, etc.), it will trigger international capital selling, rapid rise in financing costs, and then affect economic indicators, and eventually the economy and financial markets form a trampling cycle...

In this process, in addition to some old problems in emerging markets and Europe, the underwater "iceberg" is currently on the edge. The effect of the US dollar cycle on the market is still continuing. In other words, the US Treasury yield curve, the rise in the US dollar index and oil prices to drive inflation seem to be becoming the "three musketeers" of the world economy. For economies with a single economic structure and insufficient US dollar reserves, the fluctuations that have occurred in the Turkish financial market in the past few days may have begun, especially in the context of the key US Treasury yields fell again for each period this Thursday, and the curve inversion phenomenon further deepened. The core reason behind this is one sentence: every strong US dollar cycle in history will always trigger economic and financial market crises.

Next, some economies with high debt and weak foreign reserves may also be standing on the edge of the cliff. After the harvest order issued by the "Three Musketeers" of the world economy, they may also become the "glass country" of the financial market. At the same time, we checked the latest report released by the S&P Global Index. It shows that, together with Turkey, Argentina , Pakistan , Egypt and Qatar are also listed as the new "fragile Five". This standard is also based on the possibility of increasing negative risks of debt and deficits during the strong dollar cycle. From the analysis of loan-to-deposit ratio of bankers, South Africa, Chile, Mexico , Colombia, Indonesia all have the possibility of being dragged down by the rise of the US dollar.

Immediately afterwards, Indonesia's Finance Minister told Reuters on Thursday, "Indonesia hopes that the storm in Türkiye's financial market will not spread to other emerging markets, and said that the Indonesian authorities are still vigilant about such risks."However, we have found that the fluctuations in the Turkish market are still putting some pressure on the Argentina and Brazilian markets as always. Argentine Peso fell 2.85% against the US dollar on the evening of the 27th, setting a new historical low; Brazilian Real 's decline was as high as 3.1%, the largest since May 2017, but we have noticed that in addition to the above markets, except for the expansion of the interest rate spread of emerging markets, the overall situation is still relatively stable from the current reflection of the entire emerging market. (End) Original works by

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