Turkey's currency crisis triggers global worries, Middle East News & Top Stories

Turkey's currency crisis triggers global worries, Middle East News & Top Stories

Turkey's currency crisis triggers global worries, Middle East News & Top Stories

President Erdogan, meanwhile, dismissed the suggestion that Turkey was in a financial crisis, saying the lira's drop was the result of a plot.

The announcement came in his address to a symposium organized by the Foundation for Political, Economic and Social Research (SETA) on the 17th foundation anniversary of the ruling Justice and Development (AK) Party.

Turkish President Recep Tayyip Erdogan on Monday promised action against "economic terrorists" plotting to harm Turkey by spreading false rumours and vowing that they would feel the full force of the law, Reuters reported.

"We will give our answer, by shifting to new markets, new partnerships and new alliances", he said.

Relations between the United States and Turkey had plunged to their lowest in decades following unprecedented sanctions declared by the United States on Turkey over US pastor Andrew Brunson, who faces terrorism charges and up to 35 years in prison if found guilty.

US President Donald Trump said Friday he had doubled steel and aluminium tariffs on Turkey.

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.

Turkish lira lost about 40% of their value this year, mainly because of concerns about Erdogan's influence on the economy, his calls for lower interest rates and worsening of relations with the US.

After plunging to record lows yesterday, the currency clawed back as much as 9.1 per cent, although it slipped again after Mr Erdogan's remarks on consumer goods.

In its first statement since what was dubbed "Black Friday" in Turkey, the central bank said it was ready to take "all necessary measures" to ensure financial stability, promising to provide banks with "all the liquidity" they need.

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Turkey's troubled lira tumbled Monday to fresh record lows against the euro and dollar, piling pressure on stock markets on fears the country's crisis could spill over into the world economy. But there are other factors weighing down the lira.

Soner Cagaptay, director of Turkish research programme at the Washington Institute, said the confrontation has now become between the leaders of the two countries, particularly over detained American pastor Andrew Brunson.

The two countries are also at odds over their policy in Syria as the US backs the Syrian Democratic Forces (SDF), which is dominated by the People's Protection Forces (YPG), the armed wing of PKK terrorist group's Syrian offshoot the Democratic Union Party (PYD).

Some would like to see Turkey's central bank increase interest rates.

Washington earlier this month already imposed sanctions on senior Turkish officials over the Brunson case, angering Erdogan and prompting retaliatory measures by Ankara.

Investors globally are anxious about the damage spreading and have been prompted to sell riskier assets - including Asian stocks and emerging market currencies.

The Turkish finance minister says his government has prepared an "action plan" to help ease market worries as the national currency continues to tumble in the face of planned USA sanctions.

Investors are anxious that Turkish companies that borrowed heavily to profit from a construction boom may struggle to repay loans in dollars and euros, since the weakened lira means there is now more to pay back.

"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.

"MASAK started an investigation into people and institutions that spread fake news, such as those claiming that "the state will intervene to convert foreign exchange in accounts into Turkish lira" and "it will fix dollar exchange rate" by ditching floating rate policy, which is a main pillar of the free market", Treasure and Finance Ministry Press Undersecretary Ali Berber said in a tweet on August 13.

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