They have eyes but do not see.

In recent weeks the Turkish lira has fallen sharply against the dollar but regained some of its losses yesterday in expectation of a rise in interest rate. Markets are expecting a hike of 500 basis points at least, so anything less will trigger another fall. Turkey's President Erdogan said that a rise in interest rate is the "mother and father of all evil". That was in May when the dollar bought 4.3080 lira. Today a dollar buys 6.4167 lira which has pushed consumer inflation to 18%. In order to shore up its foreign exchange reserves and support its currency the government ordered exporters to convert all their earnings into the local currency. This is a one time grab because now exporters will have no money to buy raw materials to manufacture their goods. "What explains the fastest growing G20 economy in 2017, with an external debt to gross national income ratio of only 47.8% and ranked only a distant eighth in the top 20 Developing Debtor Countries (World Bank, International Debt Statistics, 2018), slipping and becoming the latest villain in the global growth story?" asked Prof T Jayakumar. "This is even more surprising when compared to countries that fare far worse on their external debt metrics, including Kazakhstan (135.1%), Ukraine (127.8%), Bulgaria (76.4%) and Malaysia (69.6%)." Erdogan should look at Argentina where inflation is at 30%, despite interest rate at a shocking 60%, and the peso is down 52.4% against the dollar. A large part of Turkey's debt "was fuelled by cheap international credit, borrowed by companies and mostly denominated in hard foreign currency". This has been named the "original sin". "Economists Barry Eichengreen, Ricardo Hausmann and Ugo Panizza in 2003 used the term 'Original Sin' to refer to the inability of a country to borrow abroad in its own currency." If you cannot borrow in your own currency you cannot repay in your own currency so when your currency falls your debt suddenly balloons. What about India? "India, with an external debt to GDP ratio of 20.4%, seems to be less vulnerable and is in a fairly safe spot." "India's non-governmental external debt (at 80.6% of the total) far exceeds its sovereign external debt (at 19.4%). External commercial borrowings, with a share of 38.2%, constitute the highest component of external debt, while 49.5% of India's external debt is dollar-denominated." There are other red flags. India's trade deficit in July was the highest in five years at $18 billion. Naturally the current account deficit, which is the difference between imports and exports, is at 2.4%. The rupee has fallen from about 62 to the dollar in 2014, when this government was elected, to 72 today. If oil and the dollar rise further, inflation will soar and the rupee will come under huge pressure. All this is nothing new, just have to look at other economies. Sadly, politicians don't want to see.