Turkey's deputy prime minister told CNBC the country's economy will not be too badly affected by the winding down of the Federal Reserve's bond-buying program, because a lot of the risk was already priced in to the market.
Speaking at the World Islamic Economic Forum in London, Ali Babacan said the next three-to-four years would be an era of higher U.S. interest rates.
"The sheer announcement effect (of future tapering of asset purchases) has already kicked into many of the market indicators, including the borrowing rates of the U.S. Treasury itself," he said. "So actually taking the steps is going to probably bring some marginal effects to the market indicators, but we believe it is going to be limited."
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Turkey has been dubbed one of the "Fragile Five" countries — a catch-all term for the most concerning emerging markets — by some economists. The other "Fragile five" are Brazil, Indonesia, India, and South Africa and all five are considered particularly sensitive to Fed tapering.
These countries' currencies saw a massive sell-off when it looked as though the Fed was going to begin winding down its asset purchases, known as Quantitative Easing or QE, this summer.
Emerging markets had benefited from QE, and loose monetary policy in several other developed economies, because they boosted global risk sentiment and resulted in more readily available cash for investors. But worries about the Fed "taper" to the QE program led to currency traders pulling their money out.
Prior to the Fed tapering furor, Turkey's economy has been picking up pace, growing by 4.4 percent in the second quarter year-on-year, beating expectations.
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