The classic emerging market external crisis engulfing Turkey should be of great interest to Aussie investors. As is always the case when the US Federal Reserve tightens monetary policy, capital repatriates from far flung jurisdictions where it sought out higher returns in the good times. If the emerging market in question was not careful during that boom, it can find itself facing a toxic combination of a falling currency, rising inflation and tightening monetary conditions all at once as the boom goes bust.
Turkey was not careful.
During the boom it accumulated large foreign-denominated debts:
