Turkey moves to calm market, opens probe amid lira fall

Cornelia Mascio
Agosto 14, 2018

The detention of American pastor Andrew Brunson over a suspected terror coup in 2016 also rocked Turkey's financial system, triggering a 20 percent tariff on aluminium and 50 percent levy on steel.

In its first statement since what was dubbed "Black Friday" in Turkey, the central bank said it was ready to take "all necessary measures" to ensure financial stability, promising to provide banks with "all the liquidity" they need.

Argentina's central bank surprised by raising interest rates by 5 percentage points on Monday, but it was still not enough to stop the peso hitting a record low.

Deutsche Bank was down 2.5 percent Monday after Bank of America Merrill Lynch downgraded the stock, citing its heavy exposure to Turkey.

The South African rand also fell more than 10 percent at one point on Monday to hit a two-year low of 15.70 to the dollar, although it later pared much of losses.

"Meanwhile, under the reserve option mechanism, banks have almost $30 billion in the Central Bank, which provides $50 billion foreign exchange deposit limits for lenders", he said.

"As of Monday morning, our institutions will take the necessary actions and will share the necessary announcements with markets", Albayrak was quoted as saying while adding that the plan would centre on "the state of our banks and the small and medium size enterprises" most affected by the lira's plunge. But most of those reports are done, and Sandven, of US Bank, said stocks may spend the next two months wavering.

"The aim of the operation is to make Turkey surrender in all areas from finance to politics".

"Nonetheless, we are mindful of political risk elsewhere in the EM involving Russian Federation as well as Brazil, Mexico, and even India". "With God's permission we will overcome this", Erdogan told his party members.

Erdogan said his country would begin to seek new partners, following what he described as a "political plot" against Ankara.

The financial sector - which underpinned the ASX's run higher last week - was perhaps the hardest hit yesterday, falling in line with global financial stocks, which have tumbled on the back of Turkey's financial crisis.

While Turkey and Argentina face very different political situations, the currencies of both countries have tumbled to all-time lows against the dollar, partly because rising interest rates in the United States lure investors to take money out of their markets and move it to the US.

Terry Sandven, chief equity strategist at US Bank Wealth Management, said the dollar has strengthened because economic growth has picked up and other regions aren't doing as well. The rupee extended its losses after opening at a record low of 69.47 against the dollar.

On the stock market, the Top-40 index was up 0.48 percent in early trade.

It also reached one-year lows on the yen and Swiss franc, traditional safe harbours in times of stress.

The Shanghai composite index was 1.2 down per cent at the close of the ASX as the Chinese yuan hot a fresh one-year low as Chinese investors reassessed the White House determination to institute trade tariffs.

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