Archive for the ‘EU and Turkey’ category

Turkey lira crashes to new lows as market alarm grows

August 10, 2018


© AFP | The lira’s drastic fall has European banks worried

10 August 2018 – 13H20 France 24

Source Link: Turkey lira crashes to new lows as market alarm grows

{Trump drops another economic bomb. – LS}

ISTANBUL (AFP) –

Turkey’s embattled lira on Friday hit new record lows against the US dollar and euro, losing over six percent in value as strains with the United States showed no sign of abating and fears grew over the exposure of European banks.

The lira was trading at 5.90 to the dollar, a loss on the day of 6.5 percent. Earlier, it had crashed some 12 percent through the 6.00 level for the first time in history, trading at one point at more than 6.20 lira per dollar.

The lira has now lost over a third of its value against both the dollar and the euro this year, with the currency battered by both concerns over domestic economic policy and the political situation.

Versus the euro on Friday the lira lost 7.0 percent to trade at 6.8.

Turkey remains at loggerheads with the United States in one of the worst spats between the two NATO allies in years over the detention for the last two years of American pastor Andrew Brunson and a host of other issues.

Talks this week in Washington failed to resolve the impasse which has led both sides to slap sanctions on senior officials amid fears of graver measures to come.

– Doubts over central bank –

Meanwhile, markets are deeply concerned over the direction of economic policy under President Recep Tayyip Erdogan with inflation nearly 16 percent but the central bank reluctant to raise rates in response.

UBS chief economist for EMEA emerging markets Gyorgy Kovacs said a giant rate hike of 350-400 basis points would be “consistent with real rate levels that in the past helped to stabilise the currency.”

He warned a “rate hike alone might not stem the worries about the US and Turkey tensions and a potential further escalation.”

And it remains unclear if the bank would be willing to sharply lift rates with analysts saying the nominally independent institution is under the influence of Erdogan, who wants low rates to keep growth humming.

Erdogan after winning June 24 elections with revamped powers tightened his control over the central bank and appointed his son-in-law Berat Albayrak to head a newly-empowered finance ministry.

“President Erdogan’s strengthened powers under the new presidential system have made it increasingly uncertain whether policymakers will be able to act to stabilise the economy,” said William Jackson, chief emerging markets economist at Capital Economics in London.

He said the lira’s fall was being exacerbated by fears the central bank “isn’t being permitted to raise interest rates”.

– ‘Accelerating speed’ –

Concerns were intensified Friday by a report in the Financial Times that the supervisory wing of the European Central Bank (ECB) had over the last weeks began to look more closely at euro zone lenders’ exposure to Turkey.

The report said that the situation is not yet seen as “critical” but Spain’s BBVA, Italy’s UniCredit and France’s BNP Paribas are regarded as particularly exposed.

“Investors have been looking at the unfolding currency crisis in Turkey as a local difficulty, however the accelerating speed of the declines appears to be raising concerns about European banks exposure to the Turkish banking system,” said Michael Hewson, chief market analyst at CMC Markets UK.

Albayrak, who formerly served as energy minister, is on Friday expected to announce what he has described as a “new economic model” for Turkey but markets remain sceptical.

The president did nothing to reassure markets with comments overnight that the pressure on the lira was due to what he described as a “variety of campaigns” and appearing to play down the magnitude of the crisis.

“If they have dollars, we have our people, we have our right and we have Allah!” he said.

The plunge in the lira has featured remarkably little on Turkish television channels and newspapers — most of which after recent ownership changes are loyal to the government — with most media focusing instead on recent flooding by the Black Sea.

© 2018 AFP

Erdogan: Soon Europeans ‘Will Not Walk Safely on Their Streets’

March 22, 2017

Erdogan: Soon Europeans ‘Will Not Walk Safely on Their Streets’, Breitbart, Chris Tomlinson, March 22, 2017

OZAN KOSE/AFP/Getty Images

Turkish President Recep Tayyip Erdoğan has warned the European Union (EU) that if the diplomatic spat between Turkey and several European countries continues, Europeans won’t be able to walk their own streets safely.

President Erdoğan made the comments Wednesday in what is another increase of tensions between Turkey and the EU that began when Germany and the Netherlands banned several Turkish ministers from holding campaign rallies for the upcoming Turkish referendum. Erdoğan has threatened Europe before, but this time he threatened the safety of Europeans if the row continues, Die Welt reports.

“If you continue to behave like this, not a single European, not a single Westerner will be able to take a step on the road safely anytime in the world,” Erdoğan said at a press conference adding: “We as Turkey are calling on Europe to respect human rights and democracy.”

Erdoğan did not go into specifics of the threat, though many Turks living in countries like Germany and the Netherlands have expressed massive support for him following the failed coup attempt last year.

Shortly after the coup, tens of thousands of Turkish expats attended a rally in Cologne, Germany, to express support for Erdoğan. On the night two Turkish ministers were refused entry in the Netherlands earlier in March, hundreds of Turks flooded the streets of Rotterdam and rioted.

Following the actions of the Netherlands, Erdoğan and his government have suspended high-level diplomatic relations with the Dutch and even accused the country of being complicit in the Srebrenica massacre calling them “Nazi remnants“.

(Video at the link. — DM)

Germany has also seen heated rhetoric from Ankara and pro-Erdoğan Turkish press who depicted German Chancellor Angela Merkel as a Nazi on the cover of newspaper Gunes.

Many in Europe are concerned what effect the row will have on the migrant deal made between the EU and Turkey last year. The deal rapidly slowed the number of migrants crossing from Turkey to Greece from hundreds a day to dozens.

The Turks have made it clear that the deal is on the table and have threatened to scrap it and send 15,000 migrants a month to Europe.

Erdoğan said the political bloc can “forget about” the migrant deal and that it is, for all intents and purposes, dead.  The Turkish government has threatened the deal before when Ankara became frustrated with the lack of visa-free access to the bloc for Turkish citizens.

More troubling has been a recent report that showed an abnormal increase in the number of migrant arrivals over the past week. Some have attributed the rise in sea landings to improved weather conditions, while others question whether this may be the first signs of the end of the migrant deal.