The Argentine peso lost half of its value this year against the US dollar, forcing some Latin American countries to impose austerity measures to avoid the same crisis.
The Argentine central bank has raised interest rates in the country to 60 percent, the highest in the world, in an attempt to stop the bleeding of the local currency.
Meanwhile, the Turkish lira fell 42 percent against the dollar this year, amid tense diplomatic disputes with the United States.
Other emerging economies, including Brazil, India and Indonesia, saw their currency depreciate. German economist Isabel Schnabel warned that the crisis in Argentina and Turkey could spark a global economic crisis, especially in emerging markets.
“The negative effects are on other emerging countries. If there is a big crisis in emerging markets, it will have a big impact on the global economy and therefore on Germany as well,” Schnabel said in remarks to the German newspaper Handelsblatt.
Negative effects on China
“China’s financial system has grown enormously, and interventions in China have led to major economic imbalances,” warned Marcel Fratzcher, head of the DIW Berlin Economic Research Center.
“The proven fact is that an emerging country has never moved into an industrialized country without at least one major financial crisis.”
Argentina recently announced new export taxes and substantial spending cuts in a desperate attempt to balance its budget.
President Mauricio Macri said emergency “austerity measures” were the only way to counter the recurrent waves of financial turmoil.
“This is not just another crisis,” McCreery said in a nationally televised speech. “This is an emergency. We can not keep spending too much, and we have to face difficulties in the best possible way. ”
In the meantime, the Turkish Finance Minister insisted that the country’s central bank will take all necessary steps to combat inflation.
Barat al-Bayraq, a close confidant of President Recep Tayyip Erdogan, said Ankara was ready to “take important measures to combat inflation.”
He insisted that the lira rate posed no risk to Turkish banks, despite widespread fears that they could weaken lenders’ assets.
“I have no reason to worry at this point,” he said. But we realize the importance of the banking sector .. We do not expect any problems in the banking sector, but in case of a problem, we will support them in every way. “