Hedge fund firm Emerging Sovereign Group is betting against the Turkish currency and on higher Turkish interest rates.
New York-based ESG, which was majority acquired by The Carlyle Group, explained in a letter obtained by Bloomberg that “Turkey had all the ingredients for a textbook balance of payments crisis” and added that it does “not believe that the central bank finally succumbing to market pressure and adopting a more orthodox monetary policy will be enough to stem the pressure on the currency.”
The Turkish lira has fallen about 9% against the euro since December 16.
Founded by Kevin Kenny in 2002, ESH was seeded by Julian Robertson’s Tiger Management. It manages about $5 billion in assets.