Turkey to boycott United States products including iPhone, says Erdogan

by Ben Pena August 15, 2018, 2:49
Turkey to boycott United States products including iPhone, says Erdogan

The dollar advanced to a 13-month peak against a basket of major currencies as traders increased their safe-haven holdings of the USA currency on worries about the lira-related fallout. Now the many contradictions in his policy positions are coming to a head, with unpredictable implications for Syria, Iran, Nato and already strained relations with Europe.

Concerns about contagion prompted investors to sell riskier assets on Monday including emerging market currencies and stocks in Asia.

In Istanbul, 35-year-old Sukru Gumus, one of millions of Turks grappling with the country's economic crisis, said the crisis was raising costs for his business. There is no economic reason.

The move came after Trump reportedly asked relevant government agencies including the State Department to draw up a menu of possible sanctions, Gonul Tol, the executive director of the Middle East Institute's Turkey program told the independent Medyascope TV.

However, she backed President Recep Tayyip Erdogan's call for the country to convert gold and dollar savings into lira.

"I am specifically addressing our manufacturers: Do not rush to the banks to buy dollars".

Oil prices jumped after Saudi Arabia said it cut production, adding to concerns about global supply as US sanctions against Iran bite its exports.

Speculators, sensing an opportunity to make a quick profit, have piled into the market, "shorting" the lira and the Turkish stock market, that is, betting that they will fall further. In 2014, one US dollar would buy two Turkish liras.

The yield on a Turkish government bond maturing in February 2028 surged by nearly a percentage point to highs of 9.347 per cent at the time of writing, according to Tradeweb.

Row over burial site for Karunanidhi; DMK moves Madras HC
Karunanidhi is considered as the leader who has always been concerned about his party and its people. In recent times, Karunanidhi and DMK achieved infamy for their alleged role in the 2G scam.

Investors are anxious that Turkish companies that borrowed heavily to profit from a construction boom may struggle to repay loans in dollars and euros, as the weakened lira means there is now more to pay back. Washington is demanding that he be fully exonerated and allowed to return to the US.

The Trump administration has done so despite the likelihood that this will bring forward the date by which Turkey will default on its debt and impose exchange controls.

Systemic monetary problems such as high external debt and a current account deficit boiled over when the U.S., a North Atlantic Treaty Organisation ally, imposed sanctions on Ankara over the continued detention of Andrew Brunson, an American pastor accused of espionage on behalf of terrorist groups.

Brunson, who has lived in Turkey for 20 years and has been detained since October 2016, is accused of helping Gulen's network and the proscribed Kurdistan Workers Party (PKK).

On August 10, US President Donald Trump announced higher tariffs on Turkish imports of steel and aluminum.

What are Turkish officials doing about the lira?

"The global financial system is so interconnected that we tend to think of them as a group and financials come under pressure", said Art Hogan, chief market strategist at B. Riley FBR in NY. On Tuesday, he said the government is working on steps to help banks and support companies affected by the currency crisis.

But there are fears that Mr Erdogan, who is famously averse to interest rate rises, may be pressuring the central bank not to act. That's because investors have lost confidence in management of the economy under Erdogan, who believes in unorthodox economic policy, demands low interest rates and constantly assails "the interest rate lobby".

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