Erdogan Finishes the Lyre, and Biden Prints Out Reserves

Erdogan continues to demonstrate miracles of economic insanity. His attempts to change economic laws by the sheer force of his will, of course, inspire some respect in terms of perseverance, but this does not make the lyre any easier. After three successive rate cuts amid inflation of 20%, some experts began to hope that Erdogan would be good at 2 + 2. But the President of Turkey made it clear yesterday that no. He doesn't give up. It is not only possible to reduce rates, but also necessary.

Sighing wearily at these comments, the Turkish lira collapsed by nearly 15%. As a result, in the last week alone, the scale of losses amounted to about 30%. In total, the lira has lost about 60% in a year. This is the kind of help we get to the economy.

On the other side of the ocean, Biden continued to build a coalition of dissatisfied with high oil prices and by personal example inspired China, Japan, South Korea and other countries to unseal their strategic reserves. We already wrote that over 3 million barrels were withdrawn from the US SPR last week. But yesterday Biden officially announced that the United States plans to free about 50 million barrels of oil from the SPR.

This is somewhere in the middle of Citi's previously announced forecasts. The bank's analysts believe that the cumulative volume of intervention in the oil market will be about 100 million barrels (China will add about 30 to US 50 million, Japan and South Korea will free 10 million and India about 5 million). This volume will be quite enough to eliminate the deficit in the oil market for the next couple of months, and there the growth in production against the background of weaker growth in demand will do their job and the market will stabilize on its own.

In this light, we cannot but remind that the current oil prices are high and selling the asset is a very promising undertaking. But it is still worth monitoring the situation, because OPEC has already stated that retaliatory measures in the form of production cuts may follow. In general, we are watching the development of events with interest.