Erdogan under pressure as Turkish lira plunges to record low

Turkey’s President Recep Tayyip Erdogan is showing no signs of backing down in a standoff with the US that rattled markets. — Reuters pic

At one point, the lira hit an all-time low of more than 7.2 against the US dollar.

The dispute with the U.S. has centered on the continued detention of an American pastor who is on trial for espionage and terror-related charges. Turkey has so far refused to comply, prompting Trump on Friday to double the tariffs on USA imports of Turkish steel and aluminium, causing the lira to plunge.

On Friday, that relentless slide turned into a crash and the lira dropped as much as 18 percent, hitting U.S. and European stocks as investors took fright over banks' exposure to Turkey.

The central bank also lowered reserve requirement ratios for banks, in a move also aimed at staving off any liquidity issues. But world stock traders were dismayed the bank did not raise interest rates, which is what many economists believe is necessary to ease the crisis.

Overnight it fell to a new record low of 7.2362 to the dollar before recovering to around 6.8222 in early Asian trading, similar to its trading price on Friday.

Even before the current crisis, the worldwide monetary environment had started turning against emerging currencies as central banks in developed economies, especially the Federal Reserve, began increasing rates as their economies improve.

Erdogan renewed his call for Turks to sell dollars and buy lira to boost the currency, while telling business owners to not stockpile the American currency.

"From Monday morning onwards our institutions will take the necessary steps and will share the announcements with the market", Berat Albayrak said.

"We are saying good-bye to those who sacrifice the strategic partnership, the alliance of an 81-million-nation state in the name of ties with terrorist organizations", said Erdogan in a speech in Trabzon. "We fail to see how the crisis can be resolved without external support", but an International Monetary Fund support package will be hard "given Turkey's current political situation". He specifically pointed to the lira being under pressure from US President Donald Trump.

Altun said a perception operation is going on over those remarks of Erdogan.

He had also said that dollars, euros and gold were now 'the bullets, cannonballs and missiles of the economic war being waged against our country'.

"When they fail to make us what they want on the field, they don't hesitate to use the economy as a weapon, just like diplomacy, just like military power, just like social and political instability", Erdoğan said.

Both are also no strangers to seeing their own currencies savaged by the market. In intra-day trade, it hit a fresh low of 69.62 against the greenback, tracking weakness in other emerging market currencies on concerns of a spill over from the Turkish crisis, according to Moneycontrol.

Safe-haven government bonds were in demand, with yields on German 10-year debt, the benchmark for the euro zone, dropping to a one-month low.

Investors globally headed for safe harbors including the US dollar as the selloff in Turkey spread to emerging markets overseas, including South Africa's rand.

Turkey's government debt plummeted on Friday, driving the yield on 10-year debt to a record close of 22.11 per cent. Five-year credit-default swaps-the cost to insure the bonds against default-climbed 75 basis points to 453 basis points Friday evening in NY, the highest level since March 2009, CMA data showed.

European stocks fell on Monday, with a pan-European index of shares down 0.3 percent and the banking stock index as much as 2.6 percent lower.

Related news:

Hot News

isis-killer-beheading-video-story-top Heat on as PGA Championship set for cold-blooded shootout
Aug 13, 2018 - 17:45
Ryan Fox's solid year at golf's biggest tournaments continued with a strong finish to the PGA Championship in the United States. Koepka couldn't help but smile, listening to it unfold. "Even if I make birdie there and give myself a chance on the last".

isis-killer-beheading-video-story-top Legendary singer Aretha Franklin ‘gravely ill’ at Detroit hospital, per reports
Aug 13, 2018 - 14:24
Over the course of her five-decade career, Aretha has earned 18 Grammy awards and sold over 75 million records. I feel very, very enriched and satisfied with respect to where my career came from and where it is now'.

isis-killer-beheading-video-story-top Trump authorizes doubling of tariffs on Turkey's steel, aluminum
Aug 13, 2018 - 14:18
Erdogan on Friday once again urged Turks to exchange gold and dollars into lira to stop the currency from plunging. The lira's value fell about 13 percent against the dollar on Friday.

isis-killer-beheading-video-story-top Former Brazil striker Ronaldo hospitalised with pneumonia in Spain
Aug 13, 2018 - 13:31
During his glittering career Ronaldo won the FIFA World Player of the Year award three times, in 1996, 1997, and 2002. Symptoms - which include a cough and difficulty breathing - can develop suddenly over 24 to 48 hours.

isis-killer-beheading-video-story-top Former White House staffer releases secret video of her firing
Aug 13, 2018 - 12:26
Manigault Newman described herself as being " complicit " in the White House's deception of Americans. Other than by media osmosis, I have no idea who Omarosa Manigault Newman is.

isis-killer-beheading-video-story-top Pakistan PM-elect Imran Khan invites Navjot Singh Sidhu for swearing
Aug 13, 2018 - 11:12
The nominated candidates for the post of prime minister will be required to submit their nomination papers by 2 pm on August 16. The speaker announced that elections of the new speaker and his deputy will be held on August 15.

isis-killer-beheading-video-story-top Deadline Day Transfer: Manchester United to make three signings today
Aug 11, 2018 - 19:16
Barcelona's Yerry Mina and Bayern Munich's Jérôme Boateng are also claimed to be on Mourinho's radar, despite contrasting World Cup performances for Colombia and Germany respectively.

isis-killer-beheading-video-story-top Father of 3 identified as third victim in Fredericton shooting
Aug 11, 2018 - 19:13
The police force also asked the public not to report on the locations or activities of authorities and first responders. In 2014, a shooting in Moncton, New Brunswick left three Royal Canadian Mounted Police officers dead and two wounded.

isis-killer-beheading-video-story-top Australian and New Zealand fire crews help tackle California wildfire
Aug 11, 2018 - 19:06
A Cal Fire heavy equipment mechanic who was helping fight the Carr Fire was killed in a auto accident, authorities say. Cal Fire says the firefighter was assigned to the Butte Unit that is assigned to the Carr Fire burning near Redding .

isis-killer-beheading-video-story-top Bill Schuette and Gretchen Whitmer Win Michigan Gubernatorial Primary Races
Aug 11, 2018 - 18:30
Whitmer recieved the majority of party support in defeating Abdul El-Sayed and Shri Thanedar. Green Party candidate Jennifer Kurland was unopposed in the primary. "I love MI .

isis-killer-beheading-video-story-top Tories turn up heat on Boris Johnson after burka row
Aug 11, 2018 - 16:25
If we fail to speak up for liberal values then we are simply yielding ground to reactionaries and extremists". A source told the BBC that it was "ridiculous" to attack the former minister's views.

isis-killer-beheading-video-story-top Horizon Air Q400 Hijacked from Seattle
Aug 11, 2018 - 15:47
Officials at the Sea-Tac Airport say an airline employee conducted an unauthorized takeoff in Washington state and has crashed. A plane that reportedly took off without permission has sparked a major security incident at Seattle-Tacoma global airport.

isis-killer-beheading-video-story-top Mosquitoes test positive for West Nile | Regional
Aug 11, 2018 - 11:43
This follows detection of the virus in mosquito surveillance pools from Cascade, Hill, and Lewis & Clark counties. Eighty percent of people infected with the virus have no symptoms, while 20 percent report a flu-like state.

isis-killer-beheading-video-story-top Here's Your First Look at Some Actual RED DEAD REDEMPTION 2 Gameplay
Aug 10, 2018 - 10:15
The " Official Gameplay Video " shows off portions of the game but also has a narrator that gives context to what is being shown. Luckily for us, as promised by Rockstar Games , the first gameplay trailer has been released.

isis-killer-beheading-video-story-top 'Castlevania' is coming to 'Super Smash Bros. Ultimate'
Aug 10, 2018 - 08:46
There are actually only two *brand* new pugilists, plus three extra "Echo" fighters - altered clones of existing characters. You can choose to turn on a chargeable Smash Ball meter that will unleash weaker final smashes upon filling.