Erdogan to ban U.S. electronics in spat while lira plunges

Lloyd Doyle
August 16, 2018

President Tayyip Erdogan said on Tuesday Turkey would boycott electronic products from the United States, retaliating in a row with Washington that helped drive the lira to record lows. Investors are also anxious about the effects of the dispute between two North Atlantic Treaty Organisation allies.

While the Brunson matter appeared far from being resolved, Turkish President Tayyip Erdogan got a shot in the arm from Qatar's Emir, who approved a package of economic projects, investments and deposits after the two met in Ankara.

Albayrak said Turkey was the direct target of "the biggest actors in the global financial system", and warned that those escalating the issue to a political level would "pay the price".

The move by Turkey's Gulf ally offered further support to a lira rally after the Turkish central bank tightened liquidity and curbed selling of the currency.

It was unclear whether Erdogan's call for Turks to sell dollars would be widely heeded, but a Turkish news agency said traders in Istanbul's historic Eminonu district converted $100,000 into lira on Tuesday.

"While the lira is stabilising, investors are still concerned that the crisis will spread to other emerging economies and currencies", said Hikaru Sato, senior technical analyst at Daiwa Securities.

Turkey on Wednesday said it was hiking tariffs on imports of several key U.S. products in retaliation for American sanctions against Ankara, as the bitter dispute between the two allies that has battered the Turkish lira showed no sign of ending.

The lira's plunge was turned into a rout on Friday when US President Donald Trump tweeted that Washington was doubling aluminium and steel tariffs for Turkey. Following the meeting, U.S. officials have given no indication that the United States has been prepared to give ground in the standoff between the two countries' leaders.

In addition to the tariffs, the Trump administration has placed sanctions on Turkey's Minister of Justice, Abdulhamit Gul, and Minister of Interior, Suleyman Soylu. Brunson is accused of backing a 2016 coup attempt against Erdogan, which Brunson denies. His case now lies at the heart of a diplomatic crisis between Turkey and the United States that has sent Turkish lira into free-fall.

"Turkish concerns looked to ease overnight, but the NZD remained under pressure as a generally stronger Dollars leaves it looking to push further towards the low-65 cent level", ANZ Bank New Zealand economists Liz Kendall and Philip Borkin said in a note. "Such policy can't be a basis for normal dialogue and it can't last long".

The rebound to below 6.0 against the dollar was driven by a banking watchdog step to limit swap transactions and by hopes of improved European Union relations.

"Copper and other commodities at first reflected the downturn in China but now have been exacerbated by expectations of further economic weakness", said Kristina Hooper, chief global market strategist at Invesco in NY.

"Rates have gone up by 10 per cent".

Stock markets fell sharply on Wednesday, with commodities-linked assets hit by dollar strength, while the lira recovered despite Turkish-US tensions ratcheting higher.

The chief executive of Turkey's Akbank said the banking sector remained strong and the measures taken to support the market had started to have an impact, adding there was no withdrawal of deposits. An upper court had yet to rule on the appeal, his lawyer told Reuters.

A previous appeal by Halavurt on behalf of Brunson was rejected by the court.

Other reports by Iphone Fresh

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