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Qatar to invest $15b in Turkey's financial markets and banks

15 August, 2018, 21:39 | Author: Lawrence Cooper
  • Samantha Lee  Business Insider

Turkey had previously said it would boycott USA electronic products.

President Recep Tayyip Erdogan on Tuesday said Turkey would boycott United States electronic goods in retaliation for punitive sanctions by Washington against Ankara over the detention of an American pastor.

"If we divert our money to foreign currency.then we will be in the position of having surrendered to the devil", Erdogan said.

If Brunson is not released, the next escalatory measure by the United States would most likely be targeted sanctions on businesspeople with close ties to President Recep Tayyip Erdoğan.

Turkey doubled tariffs on U.S. passenger cars, alcohol and tobacco amid increased tension between the two North Atlantic Treaty Organisation allies over Ankara's imprisonment of a pastor and other diplomatic issues.

National Security Adviser John Bolton met at the White House on Monday with Turkish ambassador Serdar Kilic, but the discussion reportedly did not result in any substantive progress.

Following the Qatar news, the lira firmed briefly to 5.8699 from 6.04 to the dollar, before easing back to 6.0500 by 1658 GMT.

The exchange value of the lira has fallen about 40 percent against the US dollar since January.

The pressure on European banks also spilled over into pressure on the euro currency, which weakened amid renewed concerns over the stability of the euro zone's financial system. Brunson's lawyer told CBS News that a higher court was still considering the appeal and could overrule that decision.

There was a clear, sharp drop in the lira's value on Friday after Trump tweeted he was doubling tariffs on Turkish steel and aluminum, citing a national security threat, and a smaller decline when the US sanctioned Turkey's Interior and Justice Ministers on August 1.

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Andrew Brunson is being held on terrorism charges which he denies.

His comments have so far failed to quell a crisis that economists say is largely self-inflicted, owing to an overheated economy and the debt exposure of Turkey's companies and banks.

Turkey needs to reconcile with the United States in order to stop the ongoing depreciation of the Turkish lira, which is unlikely to be possible without the release of detained U.S. pastor Andrew Brunson.

Turkish lira plunged on concerns over the deepening rift between Washington and Ankara, hitting a record low of 7.24 against US dollar and weakening some 45 percent so far this year.

Like other emerging markets, Turkish companies borrowed heavily in dollars when U.S. interest rates were low, fuelling a consumer boom that is running out as the dollar strengthens.

An employee at an upscale clothing store who declined to give his name said the amount of shoppers was unusual even in high season, attributing it to the lira's fall. Last October, the Turkish and Iranian central banks formally agreed to trade in local currencies after using the euro for settlements in the past.

"And we also have our Venus and Vestel", he said, with regards to Turkey's own domestic brands.

The latest attack on the economy showed that the dollar is no longer a "trustworthy" currency and is instead being used as a tool for political punishment, Finance Minister Berat Albayrak said at a conference in Ankara he as attending alongside Erdogan.

Andrew Craig Brunson is escorted by Turkish plain clothes police officers, July 25, 2018, in Izmir, Turkey.

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