Turkey accuses USA of 'stab in back' as currency woes persist

by Frankie Norman August 15, 2018, 2:47
Turkey accuses USA of 'stab in back' as currency woes persist

"From Monday morning onwards our institutions will take the necessary steps and will share the announcements with the market", Berat Albayrak said.

Speaking of "an economic war" Erdogan calls on Turks to support their struggling currency by exchanging any foreign money they hold for Turkish lira. Now the many contradictions in his policy positions are coming to a head, with unpredictable implications for Syria, Iran, Nato and already strained relations with Europe.

On Sunday, the German minister had criticized U.S. President Donald Trump's decision to impose additional tariffs on Turkey.

Concerns about contagion prompted investors to sell riskier assets on Monday including emerging market currencies and stocks in Asia.

"Significantly more than just official promises of action are needed to exit the current crisis", said Andy Birch, principal economist at IHS Markit, calling for "a sharp central bank rate rise". There is no economic reason ...

The Union of Chambers and Commodities Exchanges of Turkey and the Turkish Industry and Business Association called on the government to cut spending, improve ties with the European Union and bring to an end the spat with the U.S.

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

White House press secretary Sarah Sanders said the United States had seen "no evidence that Pastor Brunson has done anything wrong".

Speculators, sensing an opportunity to make a quick profit, have piled into the market, "shorting" the lira and the Turkish stock market, that is, betting that they will fall further. The growing rift has also sent the Turkish lira into a tailspin. Meanwhile, inflation has hit 15 percent. If anything, the drop in the lira is making us a lot more money right now, so we're not anxious about it at all!”.

U.S. pastor Andrew Craig Brunson is at the centre of a diplomatic row between Turkey and the US.

A turbulent five days for the Turkish economy has seen the lira hit a record low against the USA dollar, sparking fears of a meltdown as Ankara and Washington traded blows over the detention of an American pastor in Turkey.

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

The drop of the Turkish currency is the result of president Trump approving the doubling of tariffs on Turkish steel and aluminium.

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. That's because investors have lost confidence in management of the economy under Erdogan, who believes in unorthodox economic policy, demands low interest rates and constantly assails "the interest rate lobby". He has also refused to turn to the International Monetary Fund for a financial rescue, instead blaming a foreign "operation" and economic "traitors" for precipitating the currency crisis.

Turkey's central bank has promised to provide banks with liquidity. Over the past five years Turkey's growth has been virtually keeping pace with that of China and India but it is now displaying the classic signs of overheating: a large trade deficit, a construction boom and soaring debt.

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