Video Commentary: Erdogan crashes Turkish Lira, can it recover?

[embed]https://www.youtube.com/watch?v=Ia_KCIM06GA[/embed]   As the political crisis in Turkey enters its ninth day, there is tremendous pressure on TL, with foreign financial investors exiting the market at light speed, while domestics added substantially to their FX holdings.   The political crisis is certain to last for months, because Erdogan is determined to completely disenfranchise the main opposition party CHP with its leadership, presidential candidates and mayors. The real question mark is whether mass street protest will continue after the Id Holiday. In the base case scenario, they will fizzle out, improving investor-depositor sentiment somewhat.   This is important, because a pause in street upheaval will grant Central Bank time to nudge interest rates higher, thus raising the attractiveness of TL vs FX assets for domestics.  By June, Turkey will be generating enough tourism income to moderate the pressure on the currency. Odds are, TL will recover in inflation adjusted terms vs dollar, though Central Bank will let dollar/TL drift higher by 1% per month.   [embed]https://www.youtube.com/watch?v=8qnXs2jOFCo&t=52s[/embed]