Turkey shaken by financial fears, Trump rattles it further

Turkey shaken by financial fears, Trump rattles it further

The ZAR appears to have plummeted just as the Turkish Lira took another leg lower around about the time U.S. markets opened for trade. To do that, they have to sell lira - worsening the rout.

Meanwhile, markets are deeply concerned over the direction of economic policy under Erdogan, with inflation at almost 16 percent but the central bank reluctant to raise rates in response.

And what about the Fed, which is expected to keep raising interest rates as early as next month? But experts argue that the central bank should instead raise interest rates to ease inflation and to support the currency. In response, the currency renewed its sell-off.

Calling on the U.S., Erdogan said: "It is a shame".

President Trump's discarding of the Iran nuclear deal is a point of contention, as well, as almost half of Turkey's oil imports come from Iran, meaning new sanctions against Iran come back and hurt the Turkish economy as well.

In an opinion article published in the New York Times on Saturday, Erdogan wrote that Turkey and the USA had been strategic partners and North Atlantic Treaty Organisation allies for the past six decades and that his country had repeatedly come to America's aid.

He said he had authorised higher tariffs on imports from the United States' Nato ally, imposing duties of 20 per cent on aluminium and 50 per cent on steel.

Economists say that while the government may be tempted to muddle through the current situation in the hope the external and economic background improves, the lira's fall harbors considerable dangers for the economy, in particular the banking system. The U.S. has already imposed financial sanctions on two Turkish ministers and has warned there could be more measures - the doubling of tariffs might be that move. The currency has fallen more than 40 per cent this year, fanning worries about a full-blown economic crisis. Spanish banks, in particular, are the most exposed, with over $80 billion in Turkish loans.




"With EMEA a source of geopolitical risk, we think it will be hard for the ZAR to also stabilise - in effect the Rand's source of market risk has shifted from a weaker CNY to a weaker TRY and RUB", says foreign exchange strategist Viraj Patel with ING Bank N.V. Prices are already up 16 percent since previous year and this week's drop will make that worse. The euro currency dropped to a 13-month low on Friday, and bank shares fell.

Turkey's financial crisis and further USA pressure spurred more concern among investors as fears appeared to spread to American markets. Any resumption of serious migrant flows from Turkey would be a big political issue in Europe, where opposition to immigration has fueled the rise of right-wing parties such as Itay's League and the Alternative for Germany. Overnight it had retreated to its lowest since November 2016 on threats of new USA sanctions, weakening beyond the psychologically important 65-per-dollar threshold.

The US has demanded the release of Andrew Brunson and on Friday doubled tariffs on steel and aluminium imports.

Mr Erdogan said the USA had "repeatedly and consistently failed to understand and respect the Turkish people's concerns".

Q: What is Erdogan proposing to do?

He is clearly angry that the United States has not taken more action against the Gulenist movement and what he said was a failure "to unequivocally condemn" the 2016 coup attempt.

Erdogan said during an address to supporters: "Change the euros, the dollars and the gold that you are keeping beneath your pillows into lira at our banks. It is a national fight", he told a crowd in the northeastern city of Bayburt.

His finance minister later promised that the central bank would remain independent and that inflation would come down.

Related Articles

  • Manchester United vs. Leicester City live stream info, TV channel

    Manchester United vs. Leicester City live stream info, TV channel

    However, Timothy Fosu-Mensah left the club on deadline day after signing a season-long loan deal at Premier League newboys Fulham. Alderweireld was heavily linked with a move to Old Trafford all summer but Spurs never even received a bid from United.
    Mamiko Higa falls into fourth place at Women's British Open

    Mamiko Higa falls into fourth place at Women's British Open

    For Phatlum it has been an awesome week having missed six of her previous seven cuts in this event. "I'm just so grateful". Then, when Hall rolled in a 10-foot birdie putt at No. 13, they were tied for the first time since the first hole.
    Tesla board evaluating Elon Musk's proposal to take company private

    Tesla board evaluating Elon Musk's proposal to take company private

    Musk owns an nearly 20 per cent stake in Tesla, meaning he'd still need roughly $70 billion in financing to take Tesla private. China's Tencent Holdings Ltd (0700.HK), which took a 5 percent stake in Tesla past year , could also be a possible partner.
  • Perseids Meteor Shower Will Be One Of Year’s Best Sky Shows

    The comet Swift-Tuttle orbits the sun once every 133 years, so every August, the Earth passes through the comet's debris field. What is the Perseid Meteor Shower? While this weekend is the peak, Twarog predicts the showers will last through August 24.
    Germany warns US Iran sanctions could cause Middle East 'chaos'

    Germany warns US Iran sanctions could cause Middle East 'chaos'

    He doubled down on that sentiment Wednesday saying that before USA sanctions "nobody supported Iran". Trump also claimed that the sanctions were meant to protect world peace.
    Oscars Is Changing Things Up With a New Category

    Oscars Is Changing Things Up With a New Category

    The board of governors announced the changes in a letter to academy members after the board's Tuesday meeting. The airdate has been bumped up just for the 2020 telecast ― from February 23 to February 9 for 2020.
  • Baker Mayfield, Saquon Barkley electrify in their preseason debuts

    Baker Mayfield, Saquon Barkley electrify in their preseason debuts

    By now, everyone has lived (and relived) the woeful 2017 New York Giants season. Board fumble on a Browns punt return that long snapper Zak DeOssie recovered.
    Israeli Jets Pound Gaza Strip as Rockets Fired Into Southern Israel

    Israeli Jets Pound Gaza Strip as Rockets Fired Into Southern Israel

    A top Hamas official said the group waited for the delegation to leave Gaza before responding with rocket fire late on Wednesday. Both sides have said they are working toward a cease-fire agreement, though continued rocket fire may dampen efforts.
    Saudi Arabia Appears To Be Trying To Tank Canadian Asset Prices

    Saudi Arabia Appears To Be Trying To Tank Canadian Asset Prices

    It was unclear how many Saudi patients would be affected by the decision and how many were covered by the kingdom's health care system.
  • Mauricio Pochettino says his side are BOLD for not signing anyone

    Mauricio Pochettino says his side are BOLD for not signing anyone

    But I am happy to keep all the squad together. "I am sure we are going to be better, no doubt about that". Sawiris recently announced that Spurs have had a £25m bid rejected for the Villa academy graduate.
    Dragon Ends Stay at Station, On Its Way Home

    Dragon Ends Stay at Station, On Its Way Home

    SpaceX CEO Elon Musk , she said, founded the company in 2002 to build the safest and most reliable spacecraft possible. NASA's last space shuttle mission, the STS-135 flight coincidently commanded by Boeing's Ferguson, flew in July 2011.

    Manafort's attorney suggests Gates lied about how many affairs he had

    Downing pressed him on the specifics of their business relationship: which payments to Gates were authorised and which were not. Gates' earlier testimony on Tuesday , meanwhile, centered on how Ukrainian businessmen paid Manafort for his consultancy work.