With Turkey maintaining its ties with Russia, the risk of secondary sanctions against Turkish banks rises. But even if such sanctions are targeted, the central bank’s policies are already risking a deeper crisis.

The currency’s fairly benign passage through the early months of 2022 is now under threat from a variety of factors, including spiralling inflation, the cost of supporting the currency and even a growing interest in cryptocurrency.

Turkey’s currency continues to flounder, with hardline president Erdoğan apparently determined to prove that the best way to curb inflation is to reduce – rather than increase – interest rates.

Perhaps it is not such a strange time to bet billions on Turkey’s economy.

After reaching 10 million users this month, the firm is raising funds and seeking licences in Turkey and the EU.

The country’s banks have successfully weathered a series of crises during the past six years. Will this time be different?

Zafer Sönmez was well underway with a long-term plan to model Turkey’s sovereign wealth fund on Singapore’s Temasek and Malaysia’s Khazanah – his former employer – when he was unexpectedly removed from his role in March. Before going, he gave Euromoney a detailed interview on the challenges involved in building a wealth fund in a country that is not blessed with oil wealth, plentiful foreign exchange reserves or even budget surpluses. Those challenges will remain after his departure.

Emerging markets have regained some of the buoyancy lost during the early months of the coronavirus crisis, but analyst opinions hint at the difficulty of identifying which EM currencies investors should favour.

Turkey has been the outlier in CEE this year for many reasons.

Turkey’s FX strategy might look odd but, despite the damage it is wreaking on the lira, analysts doubt that the country’s economic policies will change.

Even during Turkey’s recent economic turbulence, Akbank has maintained its commitment to innovation and has been the standout private-sector lender in the country.

Turkey’s strong private-sector banks are its biggest asset – undermining their profitability for short-term political gain will prove counterproductive.

The gradual erosion of institutional credibility could prove more damaging to Turkey than economic and political shocks.

Ilhami Koç started his career at Isbank in 1986. He was chief executive of Iş Private Equity between 2001 and 2002, before returning to Is Investment as chief executive in 2002. Since November 2016, he has been chief executive of Turkish insurer Anadolu Sigorta.

As part of Euromoney's 50th anniversary coverage, we profile some of the biggest names that we interviewed for our May CEE focus.

UniCredit regional division head says the UK crashing out of the EU is one of the main external risks to CEE this year.

Local banks shrink FX loan books as recession starts to bite; municipal elections raise fears of further market volatility.

Autumn bank refinancing round under scrutiny; analysts warn of US sanctions tail risk.

Traders have been staying away from the Turkish currency this year as they watched a steady decline in its value against the dollar, but the recent deterioration of relations between Turkey and the US sent the currency spiralling into a full-blown crisis.

Will Romania go the way of Hungary when it comes to the independence of its monetary authority?

US penalties against institutions likely, say analysts; lenders remain loyal despite rising macro risk.

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