From an international trade partner’s point of view, the policy surrounding forced conversion of exporters’ FX earnings would be a more interesting topic. Of course, banks had to abide by strict limits, and easing those limits will likely mean that they will immediately make use of larger permitted long-FX positions. The hypothesis that this will not happen – that instead, net foreign capital will flow into Turkish assets – because of the ‘confidence fairy’ can only be tested in the medium-term, and that too only if it looks like real, irreversible reforms are being implemented. 

Time will tell. But President Tayyip Erdogan’s unilateral powers in this regard, his ability to reverse these new initiatives at any time he chooses, combined with his demonstrated lack of patience with conventional policy, stands in the way of the confidence fairy. 

Meanwhile, the Lira is adding to the inflation rate of future months at an alarming rate.