FX in Spotlight As Ankara, Others Push Back.

For many years, Europe has relied on Turkey to help stem the tide of migrants due to its strategic geographic location. However, now the nation of 82 million people has become an item in geopolitics over the past five years, asserting itself with a new found vigor and conviction. Turkey has become a key player in the region, acting decisively in Libya, Syria, Azerbajian and various other geopolitical engagements in the Mediterranean. And, in predictable fashion, that new found autonomy has not always agreed with EU policy or US interests in the area. And in predictable fashion, the nation’s currency has hit the rocks.

In 2018, the European Central Bank (ECB) expressed concerns over the impact the Turkish Lira would have on the Euro, as the Lira began to devalue. So far, devaluation of the Turkish Lira has not stopped Turkey from forging ahead in its pursuits in the region—and the once again in 2020. But it is clear, President Tayyip Erdogan is not ignorant of the plays in the currency play-book. In 2019, Erdogan dismissed the central bank governor, Murat Cetinkaya who refused to lower interest rates. The lira mysteriously dropped 1.06 percent after that dismissal and further 5 percent when a key UK market had a sudden injection of liquidity—yes, a sudden injection of liquidity.

It is incredible to believe that just 30 years ago, world leaders spoke about lofty ideas of collective peace and security, with World War II and the United Nations as the backdrop. Yet it seems the order established by the former colonial powers in 1917 is struggling survive. With the EU struggling for legitimacy and the US moving toward isolationism and decoupling from trade partners and international conventions, it is clear that after 103 year the world is reordering itself. And part of that reordering will inevitably be in currency.

Perhaps the current order was only maintained by careful manipulations of mechanisms that kept nations in check. But, the world seems to have grown tired of the manipulations, and many—like Turkey have begun to search for autonomy to act in its own best interests. Discontents with the stifling monetary system are multiplying all over the world making remote controls difficult. Much of what we have construed for peace, may well have been simply order: discontent under restraint.

Somewhere during the century of Western decadence, the world became vastly more sophisticated and aware of its options. Even eastern Europe, Latin America, and the Middle East are chafing under the current state. Evidently many nations have outgrown the boundaries of the past decades, egged on by a largely stiff and unequal currency market that segregates the world into sectors of a permanent underclass. As the world continues to order itself geopolitically, ideologically and financially, the currency markets reveal where the real cold war may lie, as formerly allied nations choose to move toward policies, positions and alliances that suit their own interests.