Stock markets around the world have been volatile, as crises in emerging-market countries like Turkey and Argentina have raised global concerns. Yet Turkey took the extraordinary step of raising interest rates. Will doing so reverse the plunge in the iShares MSCI Turkey ETF (NYSEMKT:TUR), which has even caused broader-based damage to emerging-market ETF Vanguard FTSE Emerging Markets (NYSEMKT:VWO) and iShares MSCI Emerging Markets (NYSEMKT:EEM)?
In the following video, Dan Caplinger, The Motley Fool's director of investment planning, goes through why Turkey raised interest rates and how it could help prevent a crisis. Dan notes that the Turkish currency recently fell to record lows against the U.S. dollar, causing capital flight out of the country and threatening Turkey's economic stability. Raising rates gives investors more incentive to keep money in Turkey, but Dan notes that similar intervention efforts in other countries have had mixed results. Dan concludes that it's uncertain that the move will help Turkey avoid a crisis, but that it makes sense to give it a try.
Don't let fear stop you from investing
Scared of the market? Millions of Americans have been scared since 2009, missing huge gains and putting their financial futures in jeopardy. In our brand-new special report, "Your Essential Guide to Start Investing Today," The Motley Fool's personal finance experts show you why investing is so important and what you need to do to get started. Click here to get your copy today -- it's absolutely free.
Dan Caplinger owns shares of Vanguard FTSE Emerging Markets ETF. The Motley Fool has no position in any of the stocks mentioned. Try any of our Foolish newsletter services free for 30 days. We Fools don't all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.