ISTANBUL, August 14, 2018 (News Wires) - President Tayyip Erdogan said on Tuesday Turkey will boycott electronic products from the United States, retaliating in a dispute with Washington that has helped drive the lira to record lows.
The lira has lost more than 40 per cent this year and crashed to an all-time low of 7.24 to the dollar on Monday, hit by worries over Erdogan's calls for lower interest rates and worsening ties with the United States.
The weakness of the Turkish currency has rippled through global markets. Its drop of as much as 18 per cent on Friday hit US and European stocks as investors fretted about banks' exposure to Turkey.
On Tuesday the lira recovered some ground, trading at 6.53 to the dollar at 09:18 GMT, up around five per cent on the day.
It was supported by news of a planned conference call in which the finance minister will seek to reassure investors concerned by Erdogan's control of the economy and his resistance to interest rate hikes to tackle double-digit inflation .
Erdogan says Turkey is the target of an economic war, and has made repeated calls for Turks to sell their dollars and euros to shore up the national currency.
"Together with our people, we will stand decisively against the dollar, forex prices, inflation and interest rates. We will protect our economic independence by being tight-knit together," he told members of his AK Party in a speech.
"We will impose a boycott on US electronic products. If they have iPhones, there is Samsung on the other side, and we have our own Vestel here," he said, referring to the Turkish electronics company, whose shares rose five per cent.
The United States has imposed sanctions on two Turkish ministers over the trial on terrorism charges of a US evangelical pastor in Turkey, and last week Washington raised tariffs on Turkish metal exports.
Erdogan said his government would offer further incentives to companies planning to invest in Turkey and said firms should not be put off by economic uncertainty.
"If we postpone our investments, if we convert our currency to foreign exchange because there's danger, then we will have given into the enemy," he said.
ISTANBUL, August 13, 2018 (News Wires) - Turkey has done enough to repair its ties with the United States, Foreign Minister Mevlut Cavusoglu said on Monday, adding that Washington had acted contrary to their alliance regarding fundamental security issues.
Cavusoglu made the comments during a speech to ambassadors in Ankara. He also said the United States should learn that it will not achieve any results by threatening Turkey.
LONDON, August 11, 2018 (News Wires) - A plunge in the Turkish lira rocked global equities and emerging markets and fear of further fallout sent investors scurrying for safety in assets like the yen and US government bonds.
European shares and a gauge of global equity markets closed down more than 1 per cent, while Wall Street also fell, though not as much. Germany’s DAX index slid 2 per cent.
The lira fell as much as 18 per cent against the dollar in its worst day since Turkey’s financial crisis of 2001. The plunge followed a deepening rift with the United States, worries about its own economy and lack of action from policymakers.
President Tayyip Erdogan told Turks to swap gold and dollars into lira as the currency tumbled after President Donald Trump doubled US tariffs on metals imports from Turkey.
Turkey later warned the United States that sanctions and pressure would only serve to harm ties between the two Nato allies, adding Ankara would continue to retaliate as necessary against US tariffs. The lira has fallen more than 40 per cent this year, fanning worries about a full-blown economic crisis.
Bank shares across Europe fell and the euro slipped to its lowest since July 2017 as the Financial Times quoted sources as saying the European Central Bank was concerned about European lenders’ exposure to Turkey. The country is not a member of the European Union but is economically linked to it.
The dollar rose as exposure to Turkey could impact European banks and spark a domino effect as people begin to pull out of those banks and into US assets, said Gregan Anderson, macroeconomic strategist at brokerage Bulltick LLC.
The flare-up in tensions has made it difficult for global investors to justify remaining in Europe and is negative for emerging markets, he said.
Policy errors created the current situation, with Turkey’s central bank decision not to raise rates in their last meeting a key driver, said Charlie Wilson, an emerging markets-focused portfolio manager at Thornburg Investment Management in Santa Fe, New Mexico.
“The lira has been weakening since and it’s coming to a head today,” Wilson said, adding the downward spiral will continue if Turkey insists on a soft landing.
“The only way to correct these policy mistakes is to really make some concrete changes on the fiscal and monetary side.”
Shares in France’s BNP Paribas, Italy’s UniCredit and Spain’s BBVA, the banks seen as most exposed to Turkey, fell 3 per cent or more.
An index of regional banking shares closed down 3.2 per cent while the pan-European STOXX 600 index fell 1.07 per cent.
The MSCI All-Country World index, which tracks shares in 47 countries, was down 1.22 per cent and erased all its gains for the week.
Wall Street also fell.
The Dow Jones Industrial Average fell 196.09 points, or 0.77 per cent, to 25,313.14. The S&P 500 lost 20.3 points, or 0.71 per cent, to 2,833.28 and the Nasdaq Composite dropped 52.67 points, or 0.67 per cent, to 7,839.11.
Investors piled into “safe” government debt, with German yields hitting three-week lows and the yield on the benchmark US 10-year Treasury note falling to 2.8750 per cent as investors sought its safety.
The safe-haven Japanese yen hit a one-month high of 113.38 against the dollar, and was last traded at 110.91.
The dollar index, which measures the greenback’s strength against a group of six major currencies, breached 96, taking it to its highest level since July 2017. It was last up 0.84 per cent at 96.309.
Emerging market stocks lost 1.66 per cent, while the Mexican peso, a proxy for emerging market currencies, shed 1.29 per cent to the dollar.
Adding to emerging market currency woes was the Russian ruble, which weakened to 67.6825 to the dollar. Overnight it had retreated to its lowest since November 2016 on threats of new US sanctions, weakening beyond the psychologically important 65-per-dollar threshold.
Oil prices rose more than 1 per cent as US sanctions against Iran looked set to tighten supply, but futures remained lower for the week as investors worried that global trade disputes could slow economic growth and hurt demand for energy.
LONDON, August 10, 2018 (News Wires) - A plunge in the Turkish lira rocked global equities and emerging markets on Friday, and fears of more turmoil sent investors scurrying for safety in assets like the yen and US government bonds.
The lira fell as much as 14 per cent against the dollar, chalking up its worst day since Turkey's financial crisis of 2001.
It came on the back of a deepening rift with the United States, worries about its own economy and lack of action from policymakers. The currency is now down more than 36 per cent this year, and 17 per cent this month alone, fanning worries about a full-blown economic crisis.
"It is hard to pinpoint the point of no return (for Turkey and the lira)" said Tilmann Kolb in the Chief Investment Office at UBS Wealth Management.
Bank shares across the continent fell and the euro slipped to its lowest since July 2017 as the Financial Times quoted sources as saying that the European Central Bank was concerned about European lenders' exposure to Turkey.
Shares in France's BNP Paribas, Italy's UniCredit and Spain's BBVA, the banks seen as most exposed to Turkey, fell as much as 4 per cent.
That took euro zone bank shares down 1.3 per cent while the pan-European STOXX 600 index fell 0.7 per cent.
"People looking at things this morning are much more aware that there is central (major) contagion risk," said David Owen, chief European economist at Jeffries in London.
"Having said that, what's happening in emerging markets is leading to risk-free rates being bid for and that includes Treasuries, Bunds and gilts."
ISTANBUL, August 9, 2018 (News Wires) - Nine people died on Thursday when a boat carrying migrants sank off the western coast of Turkey, the Turkish coast guard said. Four people were rescued.
The boat sank off the coast of Aydin province, near Kusadasi, a popular tourist destination, it said.
In 2015, Turkey became one of the main launch points for more than a million migrants taking the sea route to the European Union, many fleeing conflict and poverty in the Middle East and Africa.
A 2016 deal between Turkey and the European Union sharply reduced the flow, after hundreds died crossing to Greek islands a few miles off the Turkish shore.
Mediterranean arrivals to the bloc, including refugees making the longer and more perilous crossing from north Africa to Italy, were 172,301 in 2017, down from 362,753 in 2016 and 1,015,078 in 2015, according to UN data.
Up until Tuesday, 54 people described by the Turkish coast guard as "irregular migrants" died this year in the sea off Turkey, according to the coast guard's website.
WASHINGTON, August 2, 2018 (News Wires -- As threatened, the U.S. will impose sanctions on two Turkish officials over a detained American pastor who is being tried on espionage and terror-related charges, the White House announced Wednesday. Turkey quickly said the action would harm the two countries' relations and promised retaliation "without delay."
President Donald Trump warned last week that he would impose sanctions against Turkey, a key NATO ally, for its treatment of Andrew Craig Brunson in a case that has strained U.S.-Turkish relations. Turkish President Recep Tayyip Erdogan has said his government wouldn't back down and was willing to "go its own way" if the U.S. did act.
White House spokeswoman Sarah Huckabee Sanders said the sanctions by the Treasury Department would target Turkey's justice and interior ministers, whose agencies she said were responsible for the pastor's arrest and detention.
"We've seen no evidence that Pastor Brunson has done anything wrong, and we believe he is a victim of unfair and unjust attention by the government of Turkey," Sanders said.
Secretary of State Mike Pompeo said the Turkish government refused to release Brunson "after numerous conversations between President Trump and President Erdogan," along with his conversations with Turkish Foreign Minister Mevlut Cavosuglo. "President Trump concluded that these sanctions are the appropriate action," Pompeo said.
In Ankara, Turkey protested, called on the U.S. to reverse its decision and promised to "respond in kind without delay" against what it described as an aggressive stance by the Trump administration. It did not elaborate on possible measures.
A Foreign Ministry statement called the sanctions a "disrespectful intervention in our legal system" that would harm "the constructive efforts towards resolving problems between the two countries."
The Turkish currency dropped to an all-time low against the dollar following the announcement of the sanctions, trading at just over 5 lira against the dollar.
Brunson, 50, detained by Turkish authorities on October 7, 2016, claiming that he was a spy and had connections to a terrorist group, following a failed coup.
He was recently released to home detention. He faces a prison sentence of up to 35 years if he is convicted on both counts at the end of his ongoing trial.
The evangelical pastor, who is originally from Black Mountain, North Carolina, has lived in Turkey for 23 years and led Izmir Resurrection Church.
Under the sanctions to be imposed by the Treasury Department, any property, or interest in property, belonging to Justice Minister Abdulhamit Gul or Interior Minister Suleyman Soylu within U.S. jurisdiction would be blocked. Americans would generally be prohibited from doing business with them.
The Turkish president previously connected Brunson's return to the U.S. to the extradition of Fethullah Gulen. Ankara blames Gulen for the coup attempt, while the cleric denies involvement.