Turkey shaken by financial fears, Trump rattles it further
Aug 13 2018
A financial shockwave ripped through Turkey on Friday, when its currency nosedived on concerns about its economic policies and a dispute with the US, which PresidentDonaldTrump stoked further with a promise to double tariffs on the North Atlantic Treaty Organisation ally. Since some of Turkey's debt is in dollars, it's also making the country's financial situation worse.
With Monday's opening gap taking the EUR/USD into a new 12-month low into 1.1380, the Asia trading session is likely to see the gap close, taking the pair back to the 1.1400 technical level, where selling could begin anew if positive headlines regarding banking sector exposure to Turkey fail to materialize quickly at the outset of the European market session.
"You can never bring this nation in line with the language of threats", Mr Erdogan told supporters in the Turkish town of Unye on the Black Sea coast. "With God's permission we will overcome this", he added.
A meeting on Friday unveiling a new economic approach by Turkey's finance minister Berat Albayrak, Erdogan's son-in-law, did little to offer support for the free-falling lira as investors sought concrete steps such as an interestrate increase to restore confidence.
"Change the euros, the dollars and the gold that you are keeping beneath your pillows into lira at our banks".
"I am specifically addressing our manufacturers: Do not rush to the banks to buy dollars", he said.
Turkish President RecepTayyip Erdogan on Saturday warned the USA that it risked losing a "strategic partner" due to demands made by the U.S. government that Turkey release an American pastor who was arrested on terrorism charges.
"We will give our response to the person - who declares war against the whole world including our country - by turning towards new markets, new partners and new alliances", Erdogan added.
"We can only say "good-bye" to anyone who sacrifices its strategic partnership and a half century alliance with a country of 81 million for the sake of relations with terror groups", he said. "You dare to sacrifice 81 million Turks for a priest who is linked to terror groups?"
"The dollar also has an edge on the euro amid continuing repatriation of funds to the United States, and the pound looks to keep retreating indefinitely with "no-deal Brexit" the main driver", said Mitsuo Imaizumi, chief FX strategist at Daiwa Securities.
Trump on July 26 threatened to impose "large sanctions" on Ankara if the government did not immediately let Brunson leave Turkey.
We look the issue straining relations between the USA and Turkey.
Speaking to the press during a visit to the northern province of Ordu, the president said that the White House will no longer have an important ally in the North Atlantic Treaty Organization (NATO) if it insists on implementing measures such as the decision to double tariffs on Turkish steel and aluminum.
A delegation led by Turkish Deputy Foreign Minister Sedat Onal failed to secure a deal last Wednesday in talks in Washington on a number of issues including Brunson.