China’s financial help to Turkey will not turn around the troubled lira

14 August, 2018, 03:22 | Author: Billie Castillo
  • Zarif: Trump's jubilation over Turkish economic hardship 'shameful'

Namely, within the tightening of economic measures, US President Donald Tramp made a decision to double customs duties on Turkish steel and aluminum, speeding up the fall of the Turkish currency, which lost 16 percent on the dollar on Friday.

The threat to the lira, the stock market and the economy has drawn a sharp reaction from Erdogan, who has promised to look for new economic friends, including among traditional USA adversaries.

The lira's tailspin has unsettled global markets, with shares of European banks coming under particular pressure because of concerns over the lenders' exposure to Turkey.

The Turkish lira has lost about 40 percent this year alone, largely over worries about Erdogan's influence over the economy, his repeated calls for lower interest rates in the face of high inflation and deteriorating ties with the United States.

Brunson was charged with committing crimes, including spying for the PKK - listed as a terrorist group by both the USA and Turkey - and the Gülenist Terror Group (FETÖ), the group behind the defeated coup attempt of July 2016.

"We will not give in", Erdogan said in a speech Sunday.

Turkey and the US are now experiencing rocky relations following Washington's imposition of sanctions on Interior Minister Suleyman Soylu and Justice Minister Abdulhamit Gul for not releasing American Pastor Andrew Brunson, who faces terrorism charges in Turkey.

"If you pressure us through the dollar, we will look for other ways to carry out our works", he said.

"Germany would like to see an economically prosperous Turkey".

The South African rand was down 2.4 percent ZAR=, after earlier falling over 10 percent to a more than two-year low in earlier trading.

The lira "slides rapidly downward against our very strong Dollar!"

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Erdoğan also said that the USA stabbed Turkey in the back, three days after he sought to bolster ties with Russian President Vladimir Putin.

The Turkish government has so far struggled to soothe investors' concerns. Albayrak, who is Erdogan's son-in-law, didn't provide much in the way of details.

The central bank was ready to provide lira liquidity to banks if needed at an overnight rate of 19.25 pct - 150 basis points higher than the weekly repo rate - bankers told Reuters after the bank did not hold its regular repo auction on Monday.

The dollar, which has rallied since the lira crisis, was little changed.

In Berlin, German Chancellor Angela Merkel said "no one has an interest in an economic destabilization in Turkey" and that Ankara should ensure central bank independence.

Erdogan had on Saturday described interest rates as a "tool of exploitation", in remarks that further unnerved markets.

The interior ministry said on Monday it was taking legal action against 346 social media accounts that had posted "provocative" comments about the weakening lira. Stocks .XU100 dropped 4 percent, with the BIST blue-chip index down around 50 percent in dollar terms this year.

Foreign Minister Mohammad Javad Zarif was asked by the conservative Tasnim news agency whether there was any plan to meet with US Secretary of State Mike Pompeo.

The central bank surprised markets last month when it left interest rates unchanged despite double-digit inflation and the tumbling lira.

An important emerging market, Turkey borders Iran, Iraq and Syria and has been mostly pro-Western for decades.

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