Turkish President Erdogan has gone back to his old practices by sacking the governor of the central bank, guilty of carrying out an overly restrictive monetary policy. The market reaction was not long to come: sharp fall in the Turkish lira and in domestic equities. Turkey should not remain an isolated case: with the rise in US bond yields and in the USD, downward pressures on emerging markets should intensify. There could be a little breathing room today: US bond yields are easing, but the USD remains strong, below 1.19 against the euro.
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