Turkey's lira crisis puts European economies at risk, says expert

Markets Insider

President Recep Tayyip Erdogan vowed to boycott iPhones in a demonstration of defiance as the US held firm to its demand that Turkey release an evangelical pastor and Turkish executives called for action to bolster the lira.

Relations between the two sides have further soured over Ankara's imprisonment of American pastor Andrew Brunson. On Tuesday, he said Turkey would boycott USA electronic products.

It's not clear how Erdogan would enforce the boycott, the AP noted.

Meanwhile, US President Donald Trump signed into law a defense spending bill that provisionally blocks the transfer of F-35 fighter jets to Turkey.

On Monday, Erdogan turned his attention to social media with the announcement that Turkish authorities are investigating 346 accounts that "provoke the currency rate increase", the official news agency Anadolu reported.

'We, as the Turkish Airlines, stand by our state and our people.

Hamdi Ates, corporate communications director at Turk Telekom, posted a similar message on Twitter.

Tensions between the two countries have escalated over United States pastor Andrew Brunson, who was arrested in Turkey almost two years ago over terrorism allegations.

Erdogan has said Turkey needs to find "new friends" because of the row with the its North Atlantic Treaty Organisation ally. Turkey regards the Kurdish fighters as terrorists.

Facebook apologises after Lombok natural disaster balloons blunder, Latest World News
The powerful quake claimed hundreds of lives, wounded thousands more and displaced over 270,000 people. Rescuers search Karang Pangsor mosque after the natural disaster last weekend.

Meanwhile, the USA dollar's share of currency reserves reported to the International Monetary Fund (IMF) fell in the first quarter of 2018 to a fresh four-year low, while the euro, yuan and sterling's shares of reserves increased, according to the latest data from the IMF. However, the lira recovered some ground on Tuesday, trading at 6.60 to the dollar, up around five percent on the day, after having crashed to an all-time low on Monday.

"We (also) have our Venus and Vestel", he said about homegrown Turkish electronics brands.

"We have Vestel Venuüs in our country", Erdogan said, referencing a Turkey-based smartphone manufacturer during the announcement to members of his national conservative Justice and Development Party.

Anyone doubting that Turkey is now at serious risk of defaulting on its external debt has not being paying attention to the International Monetary Fund's (IMF) most recent staff report on that country.

Erdogan said Turkey was facing an "economic attack" and a "bigger, deeper operation".

While Turkey's central bank has raised lending rates by 500 basis points this year to 17.75 per cent, it hasn't acted since the latest turmoil began with US sanctions on the interior and justice ministers on August 1.

The United States and Turkey also have diverging interests over Syria, which is enmeshed in a protracted civil war.

As Turkey faces a serious financial meltdown, there are several Taiwanese businesses with a significant presence in the Turkish market, that are taking measures to mitigate expected losses in response to the new sanctions and tense political environment developing in Turkey.

Mr Erdogan has presided over soaring inflation and borrowing levels, but insists the lira's plight is the result of a "campaign" led by foreign powers.

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