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Turkey’s lira weakens 5 percent, Trump says won’t take pastor’s detention ‘sitting down’

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Turkey’s battered lira weakened 5 percent on Friday after a Turkish court rejected an American pastor’s appeal for release, drawing a stiff rebuke from President Donald Trump who said the United States would not take the detention “sitting down”.

The case of Andrew Brunson, an evangelical Christian missionary from North Carolina who has lived in Turkey for two decades, has become a flashpoint of tension between Washington and Ankara and has accelerated a currency crisis that has richocheted through global financial markets.

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The lira has lost nearly 40 percent of its value against the dollar this year, sparking a sell-off in emerging market currencies and weighing on global stocks. The crisis has been precipitated by investor alarm about President Tayyip Erdogan’s influence over monetary policy.

The selling has also deepened concerns about the broader economy, particularly Turkey’s dependence on energy imports and whether foreign-currency debt poses a risk to banks.

“They should have given him back a long time ago, and Turkey has in my opinion acted very, very badly,” Trump told reporters at the White House, referring to Brunson. “So, we haven’t seen the last of that. We are not going to take it sitting down. They can’t take our people.”

Trump’s comments came after a court in Turkey’s western Izmir province rejected an appeal to release Brunson from house arrest, saying evidence was still being collected and the pastor posed a potential flight risk, according to a copy of the court ruling seen by Reuters.

Brunson is being held on terrorism charges, which he denies. Trump, who counts evangelical Christians among his core supporters, has increasingly championed the pastor’s case.

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It was not immediately clear what additional measures, if any, Trump could be considering. U.S. Treasury Secretary Steven Mnuchin told Trump at a cabinet meeting on Thursday that more sanctions were ready to be put in place if Brunson were not freed.

The United States and Turkey have exchanged tit-for-tat tariffs in an escalating attempt by Trump to induce Erdogan into giving up the pastor. Erdogan has cast the tariffs, and the sell-off in the lira, as an “economic war” against Turkey.

At 1612 GMT the currency TRYTOM=D3 stood at 6.0700 to the dollar, nearly 5 percent weaker. Earlier in the session it fell as much as 7 percent. Turkish sovereign dollar bonds fell, while the cost of insuring exposure to Turkish debt rose.

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SPEEDBUMPS
“Diplomatic negotiations hit speedbumps and that’s not unusual in these kinds of situations,” said Jay Sekulow, a personal attorney for Trump who is also representing Brunson’s family. “We remain hopeful there will be a prompt resolution. Having said that, we fully support the president’s approach.”

Whatever action the United States does take, economists said it looked likely to cause more pain for Turkish assets in the immediate future.

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“There has been no improvement in relations with the U.S. and additional sanctions may be on the horizon,” said William Jackson of Capital Economics in a note to clients, adding that the lira could see a downward trend in 2019 and beyond.

Turkey’s banking watchdog has taken steps to stabilise the currency, limiting futures transactions for offshore investors and lowering limits on swap transactions. But some economists have called for more decisive moves.

Turkey and its firms face repayments of nearly $3.8 billion on foreign currency bonds in October, Societe General has calculated. For companies, the cost of servicing foreign debt has risen by a quarter in lira terms in the past two months.

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Standard & Poor’s is scheduled to release a review of Turkey’s sovereign credit rating later on Friday.

Ratings agency Fitch said the absence of an orthodox monetary policy response to the lira’s fall, and the rhetoric of Turkish authorities have “increased the difficulty of restoring economic stability and sustainability”.

DEEP CONCERNS
Finance Minister Berat Albayrak, Erdogan’s son-in-law, told investors on Thursday that Turkey would emerge stronger from the currency crisis, insisting its banks were healthy and signalling it could ride out the dispute with Washington.

Economists gave Albayrak’s presentation a qualified welcome and the lira initially found some support, helped by Qatar’s pledge to invest $15 billion in Turkey.

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However, deep concerns remain about the potential for damage to the economy. Turkey is dependent on imports, priced in hard currency, for almost all of its energy needs.

For years Turkish firms have borrowed in dollars to take advantage of lower interest rates. But the sell-off has increased the cost of servicing that debt, particularly for companies whose revenues are solely in lira.

Turkey has the highest foreign exchange-denominated debt among emerging markets, Societe Generale said in its note on Friday, estimating its short-term external debt at $180 billion and total external debt at $460 billion.

Erdogan has remained defiant, urging Turks to sell their gold and dollars for lira and describing the crisis as an “economic war”.

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Despite that, foreign currency deposits held by local investors rose to $159.9 billion in the week to Aug. 10, from $158.6 billion a week earlier, central bank data showed on Thursday.

Turkish markets will be closed from midday on Monday for the rest of the week for the Muslim Eid al-Adha festival.

Additional reporting by Ece Toksabay and Tuvan Gumrukcu in Ankara; Karin Strohecker and Claire Milhench in London; Jeff Mason and Karen Freifeld in Washington; Editing by Robin Pomeroy and Gareth Jones


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White losers have always tried to punish black election winners — Mississippi case just the latest example

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The recent experience of Hester Jackson-McCray, a black Democrat who narrowly defeated a Republican incumbent in a Mississippi statehouse race, echoes America's long history of criminalizing black politicians.

GOP legislator Ashley Henley, who lost by 14 votes, asked the Republican-controlled statehouse to overturn the results based on her claims of election irregularities, and that's not the first time in U.S. history that whites have sought to punish black politicians for winning, reported The Guardian.

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Rick Wilson: Doug Collins is a ‘screeching histrionic drama queen’ who’s ‘waving’ his ‘junk around’

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Republican strategist Rick Wilson had a few carefully chosen words for the Ranking Member of the House Judiciary Committee, Rep. Doug Collins, Thursday night after a 13-hour day of impeachment debate that featured repeated outbursts, stonewalling, and theatrics from the Republican Member from Georgia.

"I don't want to say that Doug Collins is a screeching, histrionic drama queen, because that would insult screeching, histrionic drama queens," Wilson said on MSNBC's "The 11th Hour," "but this whole thing is a bad faith effort, performative in every way."

Wilson, author of the book, Everything Trump Touches Dies, was far from done.

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Trump is wallowing in ‘self-pity’ even though McConnell promised to protect him: Morning Joe

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Appearing on MNBC's "Morning Joe," New York Times reporter Peter Baker said Donald Trump is wallowing in "self-pity" that fluctuates with "combativeness" as he worries about the effect being impeached will have on his legacy.

Speaking with host Joe Scarborough, Baker filled in the blanks from his Times report, saying the president is obsessed with the impeachment hearings and Senate trial still to come.

Asked by host Scarborough about Trump's "humiliation," Baker said, "He can count on the Republican-controlled Senate to hold the trial where he seems almost certain to be acquitted, or at least see the charges dismissed in some fashion."

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