Turkey: US won't achieve aims through sanctions

14 August, 2018, 07:24 | Author: Regina Silva
  • Merkel and Putin meet to talk about Baltic Sea Gas Pipeilne

Turkey's currency collapsed by more than 25% against the dollar last week amid rising tensions between the USA and President Recep Tayyip Erdogan over trade.

Turkey's worsening currency crisis sent world equities lower and cut into the value of emerging market stocks and currencies Monday, while boosting the prices of German bonds and other stable assets.

Experts have blamed the sharp slide in the lira on fears the country is descending into an economic crisis.

Last week, the United States imposed sanctions on Turkey's justice minister and interior minister for refusing to release American pastor Andrew Brunson, who had been in custody since 2016 on charges of terrorism and espionage that Washington says are bogus. As interest rates rise in the USA, investors pull their money out of countries that had enjoyed strong economic growth but are perceived as somewhat riskier.

Turkey's Interior Ministry said on Monday that it was taking legal action against more than 300 social media accounts that had posted messages that harmed the lira, local media reported. "We have not made concessions on justice so far, and we will never make any". "You impose sanctions on our Halkbank. and then you expect different treatment from Turkey?" said Erdogan, in a second speech in the same city. "There is no economic reason for the present (currency plunge) situation".

"The aim of the operation is to make Turkey surrender in all areas, from finance to politics", Erdogan told ruling party members in the Black Sea city of Trabzon.

Over the weekend, Erdogan lashed out at the USA, threatening to find new alliances and new markets for the economy's vast financing needs.

In addition, Erdogan also threatened the United States to "start looking for new friend and allies", if the row isn't resolved soon.

The yield on a Turkish government bond maturing in February 2028 surged by nearly a percentage point to highs of 9.347 per cent at the time of writing, according to Tradeweb.

The statement came after Finance Minister Berat Albayrak-Mr.

Albayrak also said a plan has been prepared for banks and the real economy sector, including small to mid-sized businesses, which are most affected by the foreign exchange fluctuations.

Over a third of Turkish banks' lending is in foreign currencies, according to Reuters.

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He dismissed any suggestions that Turkey might intervene in dollar-denominated bank accounts, saying any seizure or conversion of those deposits into lira was out of the question.

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.

Erdogan rejected speculation that Turkey would seek a rescue package from the International Monetary Found.

"I have just authorized a doubling of Tariffs on Steel and Aluminum with respect to Turkey as their currency, the Turkish Lira, slides rapidly downward against our very strong Dollar!" Turkey stepped in and provided Qatar with essential goods.

It had already plummeted more than 20% last week as a political clash with the United States intensified and investors fretted about the Turkish government's lack of action to tackle the problems plaguing its economy.

On Friday, Erdogan called on its citizens to convert their hard currency and gold into lira to prop up the plunging currency with a "domestic and national stance".

The Turkish currency pulled back slightly Monday morning from its overnight record low of 7.24 to the dollar as the market awaits the announcement on Monday of the government plan to rescue the beleaguered currency.

Turkey is reviewing its exit strategies from the current economic crisis. Erdogan himself was elected prime minister in 2003 on the back of a major crisis two years earlier, but has traditionally always had Washington's staunch support. Stocks have fallen modestly in the US and Europe since last week, but analysts do not see a big risk of financial turmoil.

Russian Federation has its own problems, also under sanctions from the US.

Retired Admiral James Stavridis, an ex-NATO supreme allied commander, urged Washington and Ankara to do all they can to improve relations.

Erdogan has in recent years built closer ties with countries in Latin America, Africa, and Asia.

A delegation led by Turkish Deputy Foreign Minister Sedat Onal failed to secure a deal last Wednesday in talks in Washington on a number of issues including Brunson.

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