Fallout from Russia's rebellion, lira's sharp depreciation

The aborted uprising by Yevgeny Prigozhin against Russia's military last weekend has prompted a forceful response by President Putin as he seeks to reassert his authority. There's much less certainty about the implications of the events for the war in Ukraine, but on balance we think they tilt the odds towards a larger war effort by Russia. Elsewhere, the sharp depreciation of the Turkish lira in recent weeks suggests to us that the currency will do most of the heavy lifting as part of policymakers’ shift towards orthodoxy. The lira now looks far more competitive but we think Turkey's real effective exchange rate has further scope to fall and we changed our end-2023 forecast from 26/$ to 30/$ this week.