Turkey Lira crisis: shock waves were sent through the markets as an attempt to calm contagion

  • Turkey Lira crisis: shock waves were sent through the markets as an attempt to calm contagion
    Independent.t. E.
    The Central Bank of Turkey announced a series of measures to free up cash for banks, when a country faces a currency crisis has sparked concerns about the economic policy of President Recep Tayyip Erdogan and the dispute with the United States.
    https://www.independent.ie/business/world/turkey-lira-crisis-shock-waves-sent-through-markets-as-attempts-made-to-calm-contagion-37210265.html
    https://www.independent.ie/business/world/article37197624.ece/2d139/AUTOCROP/h342/2018-08-09_bus_43121546_I1.JPG

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The Central Bank of Turkey announced a series of measures to free up cash for banks, when a country faces a currency crisis has sparked concerns about the economic policy of President Recep Tayyip Erdogan and the dispute with the United States.

The Turkish Lira fell sharply last week and fell a further 7pc on Monday as the Central Bank failed to restore investor confidence.

The Euro fell to its lowest level 7.23 the dollar late Sunday after Mr. Erdogan, in a series of speeches over the week, showed no signs of retreat in the confrontation against America and NATO.

Recep Tayyip Erdogan ruled out the possibility of raising interest rates, which economists say is needed to stabilize the currency. He also threatened to look for new allies and partners and warned of drastic measures if the businesses withdraw currency from banks.

Simon derrick, chief currency strategist at bny Mellon, said in the absence of decisive rate hike, “it’s hard to look at these ads as nothing more than a temporary soothing, not solving problems.”

The Lira recovered some of its losses after Berat Albayrak, head of Finance – and Mr. Erdogan, the son-in-law, said the government prepared an “action plan” to ease market concerns.

He also said that the government has no plans to withdraw foreign currency deposits or convert deposits in Turkish Lira.

The Central Bank stated that it had taken a number of steps to “provide all the liquidity the banks need.”

The movement intended to lubricate the financial system, to alleviate any concerns about troubles in the banks and keep them provide loans for people and business.

In times of high uncertainty, banks tend to shy away from lending to each other. The so-called credit crisis, the lack of daily liquidity can lead the Bank to collapse.

The Lira fell this year to about 45%.

The dispute with the United States were aimed at the continued detention of an American pastor who is being tried for espionage and terrorism related charges. The US responded by slapping financial sanctions against the two Ministers, and later doubled the steel and aluminum tariffs on Turkey.

The Minister of foreign Affairs of Turkey, said the United States will not be able to achieve objectives by exerting pressure and imposing sanctions against Turkey.

Speaking at a conference of Turkish ambassadors in Ankara, the collection, Mevlut Cavusoglu called on the United States “remain faithful relations based on traditional friendship and NATO” with Turkey.

Mr. Cavusoglu said: “We support diplomacy and negotiations, but it is not possible for us to accept impositions”.

Meanwhile, the Ministry of internal Affairs of Turkey has said it will take legal action against hundreds of accounts in social networks that it says are provoking the fall of the Lira.

The Ministry stated that it had initiated a legal investigation against 346 accounts in social networks “, who posted the content, provoking the dollar”.

The Istanbul Prosecutor’s office announced it had launched an investigation into “those who take actions that threaten economic stability.”

The Council on capital markets of Turkey issued a similar warning to those who spread “false, misleading or deceptive information, news and analysis”.

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