Turkey Financial Crisis: Stocks at Record Low as Lira Plunges Again

Sean Reid
August 15, 2018

Turkish President Recep Tayyip Erdogan said Tuesday that his country will ban USA electronics after a diplomatic feud pushed it into a currency crisis.

"If (the United States) have the iPhone, there's Samsung on the other side", he said, referring to USA giant Apple's iconic phone and the top South Korean brand. It was unclear how he planned to enforce such a boycott. But neither side has backed down, with Erdogan invoking Turkey's past of supporting the USA in times of need, including America's war in Afghanistan.

On Monday, Erdogan turned his attention to social media with the announcement that Turkish authorities are investigating 346 accounts that "provoke the currency rate increase", the official news agency Anadolu reported.

The Turkish lira, in particular, is down 41 per cent this year amid concerns over the country's financial stewardship and a continuing spat with the United States.

Hamdi Ates, corporate communications director at Turk Telekom, posted a similar message on Twitter.

Turkey has increased tariffs on some United States imports, including cars, alcohol and tobacco, as the diplomatic row between Ankara and Washington escalates.

The past month has seen not only the sanctions that have sunk the Turkish lira, but the imposition of new sanctions against Iran, following the unilateral US abrogation of the 2015 Iranian nuclear deal with the P5+1-the US, UK, France, China, Russia and Germany-that have led to severe strains on the Iranian economy. Turkey regards the Kurdish fighters as terrorists.

Financial markets have taken fright at inflation, rising at an annual rate of more than 15%, and have been selling the Turkish lira, which is down by 45% against the U.S. dollar since the start of the year.

The Turkish lira rebounded 6% in Tuesday trading, haven fallen 25% in the past month, weighed down by the spat with the United States and wider concerns about the country's stalling economy.

Even though a meeting between National Security Adviser John Bolton and Turkey's USA ambassador on Monday yielded no public progress, the White House is now leading the talks with Turkey over Brunson's release and a host of other issues that have dragged down the alliance.

"Recent developments in the U.S. -Turkey relationship threaten both countries' economic interests and put at risk an alliance that has proven its value over decades", Brilliant said.

Turkey's central bank on Monday announced it was ready to take "all necessary measures" to ensure financial stability after the collapse of the lira, promising to provide banks with liquidity.

Treasury and Finance Minister Berat Albayrak, son-in-law of Erdogan, will speak with about 1,000 foreign investors on Thursday via a teleconference, the private NTV broadcaster said.

An American Christian pastor standing trial in Turkey on terrorism charges has appealed again to a Turkish court to release him from house arrest and lift his travel ban, his lawyer told Reuters on Tuesday.

"I hope that some of the major European governments are going to follow suit", she said.

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