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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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Devin Nunes ‘needs a hug’: Impeachment viewers ridicule Republicans as their witnesses’ testimony backfires

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Reps. Devin Nunes (R-CA) and Micahel Turner (R-OH) complained in the open House Intelligence Committee Tuesday that the hearings were going longer and Democrats were adding time to the 45 minutes they'd reserved for each side to question witnesses.

In past hearings run by Republicans, the questioning was cut significantly short, where Democrats are allowing for as many minutes as needed for both sides. It's unknown why Nunes was so concerned about the time, he claimed that people were turning off their televisions, which is contrary to what has been reported about the ratings for the hearings, which have doubled.

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Trump pardoned Edward Gallagher for war crimes — but the Navy is still ousting him from the SEALs: report

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The acceptability of committing war crimes while in uniform is putting the U.S. Navy on a collision course with President Donald Trump's White House.

"The Navy SEAL at the center of a high-profile war crimes case has been ordered to appear before Navy leaders Wednesday morning, and is expected to be notified that the Navy intends to oust him from the elite commando force," The New York Times reported Tuesday, citing "two Navy officials."

"The move could put the SEAL commander, Rear Adm. Collin Green, in direct conflict with President Trump, who last week cleared the sailor, Chief Petty Officer Edward Gallagher, of any judicial punishment in the war crimes case. Military leaders opposed that action as well as Mr. Trump’s pardons of two soldiers involved in other murder cases," the newspaper reported.

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Climate groups applaud Gavin Newsom’s temporary fracking ban in California, but say other ‘critical next steps’ still needed

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"Relentless organizing" by climate action groups across California forced the governor to call for a moratorium on fracking, 350.org co-founder Bill McKibben said.

Anti-fracking advocates were cautiously optimistic Tuesday after California Gov. Gavin Newsom announced a moratorium on fracking in the state and new steps to mitigate the disastrous public health effects that extractive industries have on communities.

Author and 350.org co-founder Bill McKibben credited "relentless organizing" with pressuring the Democratic governor to ban—at least temporarily—the high-pressure steam injection central to the fracking process and pledge to reverse the increase in drilling permits that's taken place under Newsom's administration.

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