Wall St. gains as earnings beat; Turkish lira rebounds

Muriel Colon
August 14, 2018

"If they have iPhones, there is Samsung on the other side, and we have our own Vestel here", he said, referring to the Turkish electronics company, whose shares rose five percent.

The crisis has been sparked by a series of issues including a faltering economy-the central bank has defied market calls for rate hikes-and tensions with the United States, which has hit Turkey with sanctions over its detention of an American pastor. But they said the US tariff hike on Turkish steel at a time of "considerable stress" tells emerging economies not to expect Washington's help to calm their markets.

The lira recovered after Turkey's central bank moved to ease pressure on the currency, triggering a surge of as much as 7 percent to 6.4 per USA dollar. Erdogan has accumulated more and more control over Turkey's financial system and does not want the central bank to raise interest rates - though independent economists say that's needed to support the currency.

Erdogan said his government would offer further incentives to companies planning to invest in Turkey and said firms should not be put off by economic uncertainty.

Tayyip Erdogan made the remarks as the lira slides in response to an ongoing dispute with the U.S. over the detention of an American pastor.

President Recep Tayyip Erdogan on Tuesday said Turkey would boycott U.S. electronic goods in retaliation for punitive sanctions by Washington against Ankara over the detention of an American pastor.

The lira was around 6.55 per dollar Tuesday, up 6 percent from the previous day, when the central bank freed up cash for banks.


It did not provide information on the accounts but said they aimed to "manipulate the dollar rate and form negative perceptions" concerning the Turkish economy.

"Contagion risks centre on Spanish, Italian and French banks exposed to Turkish foreign currency debt, as well as Argentina and South Africa", warned analysts at ANZ. On Tuesday, one dollar was worth 7.2 lira. The news comes just two weeks after Brunson was released from prison into house arrest, although a Turkish court rejected his appeal to be released from house arrest.

The lira recouped some losses after hitting a new record low early today on concerns about a deepening rift with the United States. It pared losses after Albayrak's comments and stood at 7.08 at 2040 GMT on Sunday, Reuters said. "I believe in my nation", Erdogan vowed, the New York Times reported.

"In the absence of bad news, markets will move higher", said Steve Chiavarone, vice president and portfolio manager at Federated Investors in NY.

Turkey's business lobbies called on Tuesday for a tighter monetary policy to stabilise the lira, and for diplomacy to solve U.S.

Why is Erdogan mad at the United States?

Turkish Foreign Minister Mevlut Cavusoglu told reporters that the top US diplomat in Turkey would visit Brunson later Tuesday. The White House said the newly imposed sanctions would take effect from Aug 13.

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