Turkey seeks to soothe markets over tensions with US
August 16, 2018
| Middle East
ISTANBUL: Turkey’s finance minister Berat Albayrak will on Thursday seek to soothe the markets over the lira’s dramatic fall in the wake of escalating tensions with the US.
Some 3,000 investors from the US, Europe and Asia registered to join a conference call with Albayrak at 1300 GMT, the state-run Anadolu news agency reported.
Albayrak, President Recep Tayyip Erdogan’s son-in-law, was appointed last month and faces a tough task in getting the economy in order.
He will be hoping to make a stronger impression than last Friday when he made a long-planned presentation on Turkey’s growth strategy at the very moment the lira was in freefall.
“This is Albayrak’s last chance to prove three things: that he understands what is happening, that he can react accordingly and that he has influence over Erdogan,” a European diplomatic source said on condition of anonymity.
The Turkish currency is being pummeled as a result of a diplomatic standoff with its NATO ally the US — over the detention by Ankara of an American pastor — which has snowballed into one of the worst crisis in bilateral ties in years.
The lira was being traded at 5.7 against the dollar and 6.5 against euro — after it lost nearly a quarter of its value on Friday and Monday.
The slight rebound comes after the Turkish central bank took a raft of measures to keep financial stability and ensure Turkish banks have sufficient liquidity.
However, analysts say such measures are far from satisfactory and call for a sharp hike in interest rates — strongly opposed by Erdogan’s government which sees economic growth as its top priority.
“So far, Turkey does not seem to be changing its policies fast enough,” Berenberg economist Holger Schmieding commented.
“As a result, the risk is mounting that the Turkish economy may contract for a while in the absence of a credible policy change fast.”
Tensions between Ankara and Washington have risen after Turkey refused to free US pastor Andrew Brunson detained in October 2016 on charges of terror and espionage and who is currently under house arrest.
US President Donald Trump tweeted last Friday that Washington was doubling aluminum and steel tariffs for Ankara, a move that sent the lira into a tailspin.
In response, Erdogan has called for a boycott of US electronic goods such as the iPhone and Ankara has sharply hiked tariffs on some US products, in a move called “regrettable” by the White House.
Erdogan has shown no little willingness to compromise with the US and vowed to emerge victorious from the “economic attack” while slamming the lira crash as a “political plot.”
He has also warned Ankara could start looking for new allies, new markets after its partnership with Washington may be in jeopardy.
Qatar, backed by Erdogan during the Saudi-led embargoes on the emirate in 2017, on Wednesday pledged to channel $15 billion direct investment into Turkey, a sign of burgeoning ties between the two countries.
Turkey has also in recent days shown appetite to repair ties with Europe after a crisis sparked by Ankara’s crackdown on alleged plotters of the 2016 failed coup.
Erdogan is due to hold a phone call with French President Emmanuel Macron on Thursday a day after speaking with German Chancellor Angela Merkel.
An Istanbul court ordered the release of Amnesty International’s Turkey chair Taner Kilic Wednesday who has spent more than a year in jail over alleged links to the 2016 coup bid.
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