Turkey's finance minister promises economic action plan

  • Turkey's finance minister promises economic action plan

Turkey's finance minister promises economic action plan

He specifically pointed to the lira being under pressure from US President Donald Trump. It crashed more than 15% against the USA dollar, euro and pound sterling on August 10 and continued to fall when markets reopened after the weekend on August 13.

A bigger danger is that Turkey's crisis will spill over into other emerging market economies and there were signs on Monday that other countries seen as vulnerable were coming under speculative attack.

On Friday, that relentless slide turned into a crash and the lira dropped as much as 18 percent, hitting United States and European stocks as investors took fright over banks' exposure to Turkey.

"What is the reason for all this storm in a tea cup?" "There is no economic reason for the present (currency plunge) situation".

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

Terming Turkey a "vital member and engine of the global economy", the FO spokesman said Pakistan greatly appreciates Ankara's role towards regional and worldwide peace and stability.

"I am specifically addressing our manufacturers: Do not rush to the banks to buy dollars", he said.

Even before the current crisis, the worldwide monetary environment had started turning against emerging currencies as central banks in developed economies, especially the Federal Reserve, began increasing rates as their economies improve.

Presidential Communications Director Fahrettin Altun described the rumors as "disinformation campaign" based on a statement by President Recep Tayyip Erdoğan, who had said on August 12 that "You must know that keeping this nation on its feet is not just our duty but also the duty of industrialists and merchants".

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 U.S. adversaries. Meanwhile, inflation has hit 15 per cent. Goldman Sachs estimated last week that Turkish banks' excess capital would be wiped out at roughly 7.1 per dollar, for example.

Tensions between Turkey and the United States have been high in recent weeks due in part to North Carolina Pastor Andrew Brunson's arrest and detention in the country.

In a statement the White House clarified that Trump had authorized the preparation of documents to raise steel and aluminium tariffs.

Sun Xin, a lecturer in Chinese and East Asian Business at the King's College in London, agreed that the chances are good that China will help Turkey, so as to "unite some little brothers" in facing up to trade threats from the United States.

Turkey has drafted an economic action plan and has started implementing it "as of tonight" to ease investor concerns, Treasury and Finance Minister Berat Albayrak tweeted Sunday night.

President Erdogan has been criticized for interfering in the central bank's monetary policy by reportedly not allowing the regulator to hike the interest rate to prevent the lira's collapse.

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 central bank raised interest rates to support the lira in an emergency move in May, and again the following month.

It has vowed to provide banks with "all the liquidity the banks need".

Poland, more than half of whose government, household and corporate debt is denominated in foreign currencies, has seen the zloty fall by nearly as much since the beginning of August. 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.

Higher US rates make the dollar more attractive to hold, offering investors an extra incentive to switch out of risky emerging country assets.