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Turkish Currency Crisis of 2000-2001, Revisited

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  • Nazim Kadri Ekinci
  • Korkut Alp Erturk
Abstract
Turkey's exchange rate based stabilization programme had collapsed within just 11 months of its implementation in the midst of a liquidity crunch in November 2000 caused by a reversal in the capital inflow. The onset of the stabilization programme created ample opportunities for speculative investors to make relatively safe one-sided bets, and the initial success of the programme in bringing down interest rates implied substantial capital gains over securities obtained in 1999 and early stages of the programme. It was only natural that speculative investors would take the opportunity to realize these gains while the firm exchange rate commitment was still in place. The programme failed to deal with this contingency effectively, assuming that as long as it was implemented faithfully, long-term investors would be forthcoming to takeover positions speculators would want to unload. That assumption proved disastrously wrong.

Suggested Citation

  • Nazim Kadri Ekinci & Korkut Alp Erturk, 2007. "Turkish Currency Crisis of 2000-2001, Revisited," International Review of Applied Economics, Taylor & Francis Journals, vol. 21(1), pages 29-41.
    • Handle: RePEc:taf:irapec:v:21:y:2007:i:1:p:29-41
    DOI: 10.1080/02692170601034986
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    References listed on IDEAS

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    1. Demir, Firat, 2004. "A Failure Story: Politics and Financial Liberalization in Turkey, Revisiting the Revolving Door Hypothesis," World Development, Elsevier, vol. 32(5), pages 851-869, May.
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    5. Rodriguez, Carlos Alfredo, 1982. "The Argentine stabilization plan of December 20th," World Development, Elsevier, vol. 10(9), pages 801-811, September.
    6. Akyuz, Yilmaz & Boratav, Korkut, 2003. "The Making of the Turkish Financial Crisis," World Development, Elsevier, vol. 31(9), pages 1549-1566, September.
    7. Mr. Andrew Berg & Mr. Paolo Mauro & Mr. Michael Mussa & Mr. Alexander K. Swoboda & Mr. Esteban Jadresic & Mr. Paul R Masson, 2000. "Exchange Rate Regimes in an Increasingly Integrated World Economy," IMF Occasional Papers 2000/011, International Monetary Fund.
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    Cited by:

    1. Hasan Cömert & Erinç Yeldan, 2018. "A Tale of Three Crises in Turkey: 1994, 2001 and 2008–09," ERC Working Papers 1809, ERC - Economic Research Center, Middle East Technical University, revised Jun 2018.

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