Turkey takes action in bid to curb currency crisis

  • Turkey takes action in bid to curb currency crisis

Turkey takes action in bid to curb currency crisis

Turkey has so far refused to comply, prompting Trump on Friday to double the tariffs on U.S. imports of Turkish steel and aluminium, causing the lira to plunge. "There is no economic reason for the present (currency plunge) situation".

The first warning sign trouble could be afoot came when Trump said on July 26 Turkey would be facing sanctions over its holding for nearly two years of USA pastor Andrew Brunson on terror-related charges.

"The people and the Government of Pakistan reiterate their strong support for the Government and the people of Turkey in their quest for peace and prosperity, and as always, will continue to stand by them towards the achievement of these shared goals", the Foreign Office said.

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.

"That means they sell U.S. Treasuries, boosting their yields, which helps to lift the dollar against the yen", said Makoto Noji, chief currency strategist at SMBC Nikko Securities.

"I am specifically addressing our manufacturers: Do not rush to the banks to buy dollars", he said. "You should know that to keep this nation standing is. also the manufacturers' duty", he said.

The Turkish lira sunk 7 percent Monday after dropping roughly 20 percent Friday amid growing concerns over the country's economy and souring ties with western allies.

Those assurances did seem to arrest the fall of the lira somewhat but could not stop equity investors from selling.

Already on Monday, Indonesia's central bank intervened to defend the rupiah while India's central bank was seen intervening after the rupee hit a record low.

He indicated Turkey's relationship with Washington was imperiled.

The Trump administration has imposed sanctions against several countries in recent months, including Turkey, Iran and Russian Federation. The detention of an American pastor in Turkey has cast doubts over the future of partnership with Washington.

Mr Brunson has been detained for almost two years, accused him of links to the outlawed Kurdistan Workers Party and the Gulenist movement, which Turkey blames for a failed coup in 2016.

Mr Erdogan ruled out the possibility of higher interest rates, which economists said are needed to stabilise the currency.

"For now, however, the European Central Bank looks unlikely to change its forward guidance on net asset purchases (winding down in Q4 this year) or interest rates (on hold through the summer of 2019) in response to Turkey's crisis".

Early last month, he claimed the exclusive power to appoint the bankers that set interest rates - and to cement his control he has put his son-in-law in charge of economic policy.

Why is there so much fear of contagion?

These flows, some of which are highly mobile and short term, also expose Turkey to sudden stops and reversals when global investors fear the worst.

None of this looks remotely sufficient to deal with the scale of the crisis, particularly given the paucity of Turkey's foreign currency and gold reserves - which are often used by central banks to fight off currency speculators. A delegation from Washington, D.C., reportedly left Turkey last week without making progress on Brunson's case, raising the threat of further sanctions from Trump. "This is called carrying out an operation against Turkey".

Stocks were coming off their worst losses in a month as investors anxious about financial and economic upheaval in Turkey and the possibility it will spread to other countries.