Sajjid Chinoy, chief economist at JPMorgan, is of the view that the Turkish issue is not big enough to cause a global financial crisis. However, there could be some direct contagion impact on emerging market currencies, including rupee.

"The fall in lira can be quelled quickly, which depends on the Turkish policy makers," Chinoy said in an interview to CNBC-TV18.

According to him, "Technical measures to quell the fall of lira will not be enough there needs to be broader economic policy mix that would address some of their underlying imbalances."

"Currently, it is more of a sentiment driven contagion which can reverse quickly but for emerging markets (EMs) it is not a very good environment because the dollar is strengthening," said Chinoy.

“The CNY for the last four weeks have been weakening and now EM current account deficit countries like Brazil, SA and India are also deemed to be in the same asset class as Turkey and therefore we get impacted every time there is stress in Turkey,” he said.

According to him, "Irrespective of what happens in Turkey, the dollar is likely to continue strengthening because of various other factors. The Indian rupee will move in tandem with other EM currencies, so one should not focus on absolute levels of rupee".

On the domestic inflation front, he said,"The RBI is likely to be in a pause mode at least in September policy because July core inflation moderated and CPI July internals are quite soft. So, barring any unexpected development the RBI stays on hold in September."

First Published:Aug 14, 2018 11:00 AM IST