Erdoğan says Turkey will boycott USA electronic products

Cornelia Mascio
Agosto 14, 2018

The Turkish currency reached a new record low of 7.24 against the United States dollar in Asia Pacific trade when markets opened on Monday morning.

The details would be unveiled shortly, the country's finance minister told Turkish newspaper Hurriyet.

"From Monday morning onwards our institutions will take the necessary steps and will share the announcements with the market", Berat Albayrak said. Turkey considers the control of regions in northern Syria by the SDF and the YPG a direct threat against its national security due to the ongoing conflict with the PKK since early 1980 that killed more than 40,000 people and cost billions to the country's economy.

The lira currency, which has lost more than 40 percent against the USA dollar this year, pulled back from a record low of 7.24 earlier on Monday after the central bank pledged to provide liquidity, but it remained under selling pressure and its meltdown continued to rattle global markets.

India's rupee has fallen to a record low as Turkey's currency crisis continues to rock global emerging markets.

Mr Albayrak said the country would "act in a speedy manner" and its plan included help for the banks and small and medium-sized businesses most affected by the dramatic volatility in the lira. There is no economic reason ...

Erdogan exacerbated problems on Friday when he urged citizens to sell dollars and gold in exchange for lira.

"I am specifically addressing our manufacturers: Do not rush to the banks to buy dollars". "Doing business with the U.S. is like sleeping with a python: you don't know when you're going to get bit".

Why is the lira falling?

Experts have blamed the sharp slide in the lira on fears the country is descending into an economic crisis. Meanwhile, inflation has hit 15%. Elsewhere, markets were seeing losses of about 0.5% to 0.8% as investors digested last week's 25% fall in the lira.

Writing in "The New York Times", he warned Ankara would "seek new friends" after the United States "upset and annoyed" Ankara with the new sanctions.

President Trump last week imposed sanctions on Turkey over its refusal to release an imprisoned U.S. preacher.

The dispute centres on Turkey's refusal to release USA pastor Andrew Brunson.

Brunson, who has lived in Turkey for 20 years and has been detained since October 2016, is accused of assisting Gulen's network and the outlawed Kurdistan Workers Party (PKK). It also doubled tariffs of steel and aluminum imports.

What are Turkish officials doing about the lira?

Not much yet. Turkey's finance minister said they would start implementing an action plan on Monday but gave no further details. Erdogan has ruled out an interest rate hike, which can slow economic growth, but analysts say one is urgently needed to stabilize the currency.

Investors are anxious about a confluence of factors: the country's reliance on foreign loans that may stop flowing in as interest rates rise in other economies, like the U.S.; Erdogan's insistence that the central bank not raise interest rates, as most independent analysts say it should; and a spat with the U.S. that has led to sanctions and the fear of greater isolation from longtime allies in the West.

Investors are anxious that Turkish companies could struggle to repay loans in dollars and euros - a debt pile that only grows as the lira falls.

The European Central Bank is understood to be anxious about the exposure of eurozone banks to Turkey, with Spain's BBVA, Italy's Unicredit and France's BNP Paribas thought to be in the firing line. In particular, the report flags that Spain's BBVA, Italy's UniCredit and France's BNP Paribas, all of which have significant operations in Turkey, are especially exposed.

Investors have rushed to the safe haven Swiss franc, which hit a one-year high of 1.1288 franc per euro on Monday and last stood at 1.1324.

There are already signs that contagion is spreading, with investors selling riskier assets on Monday.

Altre relazioniGrafFiotech

Discuti questo articolo

Segui i nostri GIORNALE