Trading floor of the Borsa Istanbul. Turkish stocks have fallen as much as 11% in dollar terms since their August peak. Photo: Reuters/Murad Sezer

Turkey’s stock market is now in a correction, at least in US dollar terms, with the Istanbul 30 index down by more than 11% since its August 29 high. A third of the decline is due to the depreciating Turkish lira, which fell from 3.4 to the dollar on Sept. 9 to 3.55 today.

The Fed’s unexpectedly hawkish tone at last week’s FOMC meeting was bad for all the high-interest, high-inflation currencies, but what really knocked the Turkish lira and stock market for a loop was President Erdogan’s threats against Iraqi Kurdistan.