Lira crisis: Turkey to boycott U.S. electronic goods over sanctions

Mae Love
August 14, 2018

More than 30 percent of the lira's loss has come since June, when Erdogan took over the office with new sweeping powers.

US and global markets fell on Friday and Monday, reflecting concerns that Turkey's problems could spread.

Turkish actions against US economic interests will be largely symbolic.

The demonisation of interest rates by Mr Erdogan is a "particularly risky development", as it sets the mark high for the exchange rate level at which the central bank will have no choice but to hike rates aggressively.

Russian Federation has predicted that the role of the USA dollar will decline, and says it is looking at the possibility of using national currencies to settle trade deals with Turkey, China and Iran.

"When the dollar turns into a tool of political punishment, we will continue to take steps to protect the Turkish lira even more strongly in worldwide trade", Albayrak said.

The Turkish lira has nosedived in value in the past week over concerns about Erdogan's economic policies and after the United States slapped sanctions on Turkey angered by the continued detention of an American pastor.

It's not clear how Erdogan would enforce the boycott, the AP noted.

Global markets skidded on Friday as investors anxious that financial distress in Turkey could affect the worldwide banking system and the broader economy.

"We (also) have our Venus and Vestel", he said about homegrown Turkish electronics brands.

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The answer may lie in Turkey , where a political standoff with the Trump administration has led to a sudden currency crisis. China's yuan dipped a little more than 0.3 percent on Monday, adding to the losses the currency has sustained this year.

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Showing no signs of backing down in the standoff, President Recep Tayyip Erdogan said Turkey would stop procuring US-made iPhones and buy Korean Samsung or Turkish-made Vestel products instead.

"We will give our answer, by shifting to new markets, new partnerships and new alliances", he said. "We will support him until the end".

"They do not hesitate to use the economy as a weapon against us, as they [also] tried in the diplomatic or military field, and efforts to sow social and political instability", he added.

"What is the reason for all this storm in a tea cup?" This might provide a breathing space but probably only a temporary one, given that Turkey is an open economy and has large foreign currency needs.

The Turkish lira had seen a significant drop over the past weekend and Turkeys central bank has said its ready to take all necessary measures to ensure financial stability after the collapse.

"What you want to see is tight monetary policy, a tight fiscal policy and a recognition that there might be some short-term economic pain - but without it there's just no credibility of promises to restabilise things", said Craig Botham, Emerging Markets Economist at Schroders. On Tuesday, the Indian rupee hit a record low as a result of the economic issues in Turkey.

The top US diplomat in Turkey has called for the cases against an American pastor and others held in Turkey to be resolved "without delay" and in a "fair and transparent manner".

Trump's national security adviser John Bolton met with Turkish officials in Washington on Monday, Turkey's state-run media reported.

Mr Erdogan told a news conference in the Turkish capital, Ankara: "You act on one side as a strategic partner, but on the other, you fire bullets into the foot of your strategic partner".

The Trump administration doubled tariffs on Turkish steel and aluminum last week and targeted Erdoğan's interior and justice ministers with financial sanctions two weeks ago over Ankara's detainment of an American pastor.

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