Turkey unveils new economic plan

11 August, 2018, 09:25 | Author: Eric Barnett
  • The lira went into free-fall sinking more than 10 percent

"All the steps taken against Turkey will be given a befitting response as they have been given before", he vowed. USA stocks were also rattled. "It is time for Erdogan to face reality".

A slew of unnerving headlines this week from the United Kingdom, Russia, and Turkey has culminated in a wild Friday for global markets.

Oil prices rose more than 1 percent as US sanctions against Iran looked set to tighten supply, but futures remained lower for the week as investors anxious that global trade disputes could slow economic growth and hurt demand for energy.

Trump said via a tweet that the tariff on aluminium imports will be increased to 20 per cent and the tariff on steel imports will be raised to 50 per cent as the Turkish Lira "slides rapidly downward against our very strong Dollar!"

Q: What impact could the turmoil have outside Turkey?

These fears spilled over into United States markets, with investors shifting their focus away from strong corporate earnings to what was happening across the Atlantic.

The tumult also affected Wall Street, which finished the week on a sour note, with the Dow Jones, S&P 500 and Nasdaq all finishing down on Friday. "On some days, I end the day with a loss".

Here is what you need to know.

It argued that the country accounted for less than 2 percent of group revenues and a 10 percent fall in the lira would affect its CET1 ratio - capital that must be set aside as a buffer against financial shocks - by only around 2 basis points.

On June 21, Turkey's retaliatory tariffs went into effect on 4 to 70 percent of more than $1 billion worth of US goods. The sanctions on two officials were announced Wednesday.

"A US-induced crisis in Turkey will create a new martyr in the region, with far-reaching consequences which American congressmen and President Trump do not foresee", Bulent Gultekin, a professor at the Wharton School of the University of Pennsylvania and the former Turkish Central Bank governor, told MEE.

Turkey has had this sort of experience - a disastrous currency collapse shrinking its economy and impoverishing its citizens - several times before, most recently in February 2001. According to a source in Erdogan's office, the two said they were pleased with the positive direction in their economic and trade ties and with the ongoing cooperation in the energy and defense sectors. Congress is pushing for a slew of separate sanctions, including halting delivery of F-35 fighter jets and blocking funding to Turkey from the World Bank and the International Monetary Fund.

The pound also nosedived this week. His comments did nothing to shore up the lira currency. The dollar index, which measures its strength against a basket of other developed-nation peers, hit its highest level since June 2017 on Friday.

Investors were already grappling with what a no-deal Brexit would mean for the continent.

Turkey was facing artificial financial volatility, Erdogan said, and people should not pay close attention to foreign exchange prices, and should instead focus on the "big picture". "Look at what we were 16 years ago and look at us now".

The announcement intensified fears that United States sanctions on Russian Federation may not recede anytime soon.

The lira's value fell about 13 percent against the dollar on Friday.

In a televised speech on Friday, he referred to the diplomatic standoff as an economic war.


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