Turkey promises measures to calm the markets

Turkey promises measures to calm the markets

A general view of Fatih Mosque and the area around at sunset. On Tuesday, October 17, 2017, in Istanbul, TurkeyPicture copyright
AFP

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A look over Istanbul

Turkey has pledged that it will take action to calm markets after the lira fell to a new record low in Asian trade.

The details would be announced shortly, said the Minister of Finance of the country of the Turkish newspaper Hürriyet.

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

On Friday, the lira lost 20% of its value against the dollar. Last year, it had already fallen by more than 40%.

Mr Albayrak said that the country is "acting fast" and that its plan includes assistance to the banks and small and medium-sized enterprises most affected by dramatic lira volatility.

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Getty Images

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Mr. Erdogan said the drop in the lira was a "storm in a teacup".

His assurance came after the Turkish president blamed the overthrow of the lira for a plot against the country.

"What is the reason for all this storm in a teacup? There is no economic reason … This is called an operation against Turkey," he said.

Recep Erdogan again urged the Turks to sell dollars and buy lira to strengthen the currency.

"Above all, I appeal to our manufacturers: Do not rush to the banks to buy dollars … You should know that to keep this nation, … is also the duty of the manufacturer," he said.

Why is the lira falling?

Experts have blamed the decline in the lira for fears that the country is going into an economic crisis.

The Turkish stock market has also fallen 17%, while government borrowing costs have risen to 18% per year, according to BBC World Service business correspondent Andrew Walker.

Meanwhile, inflation has risen by 15%.

Investors fear that Turkish companies, which are heavily financed by a construction boom, will have difficulty repaying loans in dollars and euros as the weakened lira means that there is now more to repay.

Then Turkey's relations with the USA worsen. The government of Donald Trump sanctioned Turkey's justice and interior ministers last week in response to the detention of US pastor Andrew Brunson, who has been held for almost two years for alleged ties to Turkish political groups.

On Friday, the US has dealt another blow to Turkey and the Lira. In it, Trump said he had agreed to double tariffs on Turkish steel and aluminum.

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