Published: Mon, August 13, 2018
Economy | By

Fall of the Turkish Lira raises concerns for emerging markets

Fall of the Turkish Lira raises concerns for emerging markets

In an interview with Hurriyet newspaper published online, Albayrak described the lira's weakness as "an attack", echoing President Tayyip Erdogan - who is his father-in-law - and said the action plan was ready.

Reverberations spread through global markets, with European stock markets especially hit as investors took fright over banks' exposure to Turkey.

President Recep Tayyip Erdogan on Sunday criticized the US, saying Turkey will say "goodbye" to those, who prefer terrorists as their strategic partner.

Turkey also warned there would be retaliation against the US' imposition of the tariffs.

LMoreover, El-Diwany said that the Turkish market gets an advantage in the exportation markets, which both Egypt and Turkey export the same products for, explaining, "Egypt can not well compete with Turkey in exporting textiles to the same markets, as the Lira is now down, hence prices will be lower than before".

"I'm not aware of any prior administration using tariffs in this way, and there's a very simple reason: because they're an incredibly blunt instrument that often can have blowback on American workers and consumers as we've seen in the China context", said Ned Price, a former Central Intelligence Agency officer who also served as a National Security Council spokesman during the Obama administration.

During Sunday's meeting, President Recep Tayyip Erdoğan also said that the fluctuation in the Turkish lira is a plot against Turkey, but the Turkish people will not give in. Additionally, on Friday President Donald Trump tweeted that he is increasing tariffs on US imports of Turkish of steel and aluminum.

Prior to Trump's announcement, the Turkish lira fell to its lowest point ever against the us dollar on Friday.

Mr Trump intensified his spat with Turkey by imposing the higher tariffs, putting unprecedented economic pressure on a North Atlantic Treaty Organisation ally and deepening turmoil in Turkish financial markets.

"As he stated, the president has authorized the preparation of documents to raise tariffs on imports of steel and aluminum from Turkey", White House Deputy Press Secretary Lindsay Walters said.

The Euro opened this week's trading session gapping lower against its United States counterpart, responding to the Turkish Lira's sharp downturn last week.

The Turkish lira has lost about 40 per cent of its value this year, largely over worries about Mr. Erdogan's influence over the economy, his repeated calls for lower interest rates in the face of high inflation and worsening ties with the United States.

Ankara followed up the arrests of Andrew Brunson, an American evangelical pastor who has lived it Turkey for more than 20 years, and Serkan Golge, a Turkish-American scientist working for NASA, by imprisoning Turkish staff from various US diplomatic missions. Gulen denies the allegation.

After Mr. Brunson had been in jail for nearly 20 months, a court in July ordered him to be moved to house arrest.

U.S. President Donald Trump introduced a round of sanctions on August 1, preventing the Turkish justice an interior ministries from doing business with U.S. businesses.

According to the Wall Street Journal, the fall in the TRY in the face of increased U.S. tariffs on aluminum and steel raises uncertainty for investors in emerging markets.

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