In our view, Turkey’s currency crisis is driven by the erosion of central bank credibility rather than by the build-up of excesses that normally precedes a currency crisis The lira’s depreciation has improved prospects for export-oriented firms and brought the country’s current account back into surplus, but at the cost of higher inflation for consumers Monetary policy cannot be used to simultaneously devalue the currency and to fight inflation, so long as a country’s capital account remains open — Turkish…