Erdogan says Turkey to 'boycott' iPhones and other USA electronic goods

Sean Reid
August 14, 2018

Switching to foreign currency would mean giving in to the enemy, Erdogan said.

The unit recovered somewhat after Turkey's central bank announced a raft of measures aimed at calming markets.

"On the one hand you are going to be a strategic partner and on the other hand you put a bullet into your strategic partner", Erdogan added. "In our country we have Venus and Vestel", he said, referring to a Turkish-made phone made by electronics manufacturer Vestel.

Andrew Craig Brunson, an evangelical pastor from Black Mountain, North Carolina, arrives at his house in Izmir, Turkey, July 25, 2018.

Brunson was charged with committing crimes, including spying for the PKK - listed as a terrorist group by both the U.S. and Turkey - and the Fetullah Terrorist Organization (FETO), the group behind the defeated coup attempt of July 2016.

"The attempts by Turkey to halt the demise of the lira and the country's soaring bond yields have proven inadequate thus far", said David Cheetham, chief market analyst at XTB. "Turkey will be stronger at the end of this process". The US has refused to extradite Fethullah Gulen, who lives in Pennsylvania.

He has threatened to seek new alliances - a veiled hint at closer ties with Russian Federation - and warned of drastic measures if businesses withdraw foreign currency from banks.

Investors are anxious about a confluence of factors: the country's reliance on foreign loans that may stop flowing in as interest rates rise in other economies, like the U.S.; Erdogan's insistence that the central bank not raise interest rates, as most independent analysts say it should; and a spat with the U.S. that has led to sanctions and the fear of greater isolation from longtime allies in the West.

Turkish credit default swaps - a hedge against financial turbulence - surged to their highest since the 2008 global financial crisis as the lira took its latest dive. Investment in factories and other fixed assets grew 5.5 percent in the first seven months of the year, down from 5.7 percent in the year to June.

European stocks fell in early trade on Monday, with a pan-European index of shares down half a percent and the banking stock index as much as 1.2 percent lower. Its drop of as much as 18 percent on Friday hit European and USA stocks as investors fretted about banks' exposure to Turkey.

After falling to a 21-month low on Monday, euro zone bank stocks rose 0.8 per cent versus a 0.4 percent gain by the pan-European STOXX 600 cross-sector benchmark.

The ruckus between Turkey and the USA has impacted on other countries' currencies, including the Indian rupee, as investors fear the lira's wobbles could spread to developing nations. Even more, Trump's direct reference to the Turkish lira sent the currency tumbling.

But the bank did not increase interest rates, which would help contain inflation while supporting the lira.

The Turkish Central Bank announced on Monday that banks would be given all the liquidity - help to keep money moving - they needed. The president is famously averse to interest rate rises.

The currency was supported by news of a planned conference call in which the finance minister would seek to reassure investors concerned by Erdogan's control of the economy.

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