Published: Tue, August 14, 2018
Finance | By Claude Patterson

Lira crisis: Turkey to boycott USA electronic goods over sanctions

Lira crisis: Turkey to boycott USA electronic goods over sanctions

A man shops in a market in Istanbul, Monday, Aug. 13, 2018. It also pledged to provide "all the liquidity banks need".

On July 18, ties take a turn for the worse when a Turkish court orders an American pastor, Andrew Brunson, held for nearly two years on terror charges, to remain in prison. Yet he remained optimistic, saying "it is not at all like we sank and we are finished.The dynamics of the Turkish economy are solid, strong and sound and will continue to be so".

The fall, shared by other parts of the world, ... came as Turkey's lira fell sharply in value over the last week, after U.S. President Donald Trump slapped heavy tariffs on Turkish steel exports. 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".

"It's another Manic Monday", said Jordan Rochester, a currency strategist at Nomura International in London.

Russian Federation has predicted that the role of the United States dollar will decline, and says it is looking at the possibility of using national currencies to settle trade deals with Turkey, China and Iran.

A bigger danger is that Turkey's crisis will spill over into other emerging market economies and there were signs on Monday that other countries seen as vulnerable were coming under speculative attack. But Erdogan's threat underlines that the standoff over the fate of an American pastor held in Turkey is unlikely to end soon.

State-run Anadolu Agency says the lawyer on Tuesday also appealed to a court to lift a travel ban imposed on Pastor Andrew Brunson.

Turkey's weakened currency, the lira, plunged by a full 20% in response. Also, a diplomatic spat with the United States is resulting in sharply higher tariffs on Turkish steel and aluminum. In particular, the report flags that Spain's BBVA, Italy's UniCredit and France's BNP Paribas, all of which have significant operations in Turkey, are especially exposed.

Erdogan said his country will boycott USA -made electronic goods amid a diplomatic spat that has helped trigger a Turkish currency crisis.

"If [the US] has the iPhone, there's Samsung on the other side", Mr Erdogan said, referring to Apple and its South Korean competitor.

It was unclear how the Turkish leader planned to implement the boycott.

The growing rift has also sent the Turkish lira into a tailspin.

President Erdogan has accused the United States of trying to "bring Turkey to its knees through threats over a pastor".

In a joint statement issued Tuesday, the industrialists' group TUSIAD and the Union of Chambers and Commodity Exchanges called on the government to allow the central bank to raise interest rates to help overcome the currency crisis.

"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", Erdogan said.

But the bank did not increase interest rates, which would help contain inflation while supporting the lira.

Financial markets have taken fright at inflation, rising at an annual rate of more than 15%, and have been selling the Turkish lira, which is down by 45% against the U.S. dollar since the start of the year.

The Turkish currency crisis has been affecting global financial markets.

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