Turkish President Erdogan appealed on Friday for calm amid currency drop, urging people to change foreign money into local lira.

Erdogan stance came in the hill of the plunging of the Turkish currency on Friday, raising questions about the countrys financial stability, as investors worried about the presidents unorthodox economic policies and a dispute with the United States that has led to sanctions.

The lira hit a record low of 6.24 per dollar on Friday, before recovering to 5.92 – still down a whopping 7 percent on the day. The currency has fallen 66 percent since the start of the year, pushing up the cost of goods for Turkish people and shaking international investors confidence in the country.

Meanwhile, US president Donald Trump said in a tweet on Friday that his administration will double Tarrifs on Steel and Aluminium with respect to Turkey, emphasizing that the relations between US and Turkey are “not good at this time!”

I have just authorized a doubling of Tariffs on Steel and Aluminum with respect to Turkey as their currency, the Turkish Lira, slides rapidly downward against our very strong Dollar! Aluminum will now be 20% and Steel 50%. Our relations with Turkey are not good at this time!

— Donald J. Trump (@realDonaldTrump) August 10, 2018

One of the triggers of the turmoil has been a standoff with the US over a detained American pastor that Turkey, a NATO ally, has put on trial for espionage and terror-related charges linked to a failed coup attempt in the country two years ago.

Washington has demanded the pastors release and imposed financial sanctions on two Turkish ministers and warned of additional measures. Read Full Story

High level meetings in Washington between US and Turkish officials ended this week without an apparent resolution.

Meanwhile, investors are worried about the economic policies of President Recep Tayyip Erdogan, who won a new term in office in June with sweeping new powers.

Erdogan has been putting pressure on the central bank to not raise interest rates in order to keep fueling economic growth. He claims higher rates lead to higher inflation – the opposite of what standard economic theory says.

Independent analysts argue the central bank should instead raise rates to tame inflation and support the currency.

In modern economies, central banks are meant to be independent of governments to make sure they set policies that are best for the economy, not politicians. But since adopting increased powers, Erdogan appears to have greater control over the bank as well.

Erdogan on Thursday portrayed the currency drop as a “campaign” to harm Turkey and called on the people not to worry.

“If they have their dollar, we have the people, we have Allah,” he said.

Last week, he called on Turks to convert their foreign currency and gold into Turkish lira to help the currency.

Treasury and Finance Minister Berat Albayrak- who is Erdogans son-in-law- was scheduled later on Friday to outline a “new economic model.”

The currency drop is particularly painful for Turkey because the country finances a lot of its economic growth with foreign investment. As the currency drops, Turkish companies and households with debt in foreign currencies see their debts expand.

Coupled with an inflation rate of nearly 16 percent, that could cause a lot of damage to the local economy.

Foreign investors could be spooked and try to pull their money out, reinforcing the currency drop and potentially leading to financial instability.

Aylin Ertan, a 43-year-old caterer in Ankara, said she was concerned over the future of her small business.

“The price of the food that I buy increases day by day, the fuel that I put in my car to distribute lunches is more expensive, but I cannot raise my prices from one day to the next,” she said. “On some days, I end the day with a loss.”

Turkeys woes shook world markets, pushing down stock indexes and lifting the dollar, which traders around the world typically buy in times of concern.

On Friday, the euro sagged to a 13-month low against the dollar, down 0.7 percent to $1.1450, after the Financial Times reported that the European Central Bank was worried about possible losses at eurozone banks operating in Turkey.

But analysts say that while there may be losses at banks, Turkeys economic problems do not pose a big threat to Europe or other big economies, like the United States.

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Last Update: Friday, 10 August 2018 KSA 16:21 – GMT 13:21

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