Erdogan says US set deadline for pastor's release

Marco Green
August 14, 2018

Erdogan said at a conference in the capital Ankara.

The detention of an American pastor in Turkey has cast doubts over the future of partnership with Washington. He asserted that Turkey was "under siege" by "global bullies" eyeing Turkey's hard-fought gains. "Turkey is too big and influential a country to be condemned to a single axis".

By Monday morning, the lira had pulled back from a record low of 7.24 to the dollar, after the central bank pledged to provide liquidity and cut reserve requirements for Turkish banks.

Early last month, he claimed the exclusive power to appoint the bankers that set interest rates - and to cement his control he has put his son-in-law in charge of economic policy.

Some would like to see Turkey's central bank increase interest rates. Mr Erdogan favours lowering borrowing costs to fuel credit growth and economic expansion. Meanwhile, inflation has hit 15 per cent.

But Erdogan indicated he was in no mood to offer concessions to the United States, or financial markets. The EU put new taxes on United States motorcycles in response to the Trump administration's tariffs on products imported from Europe.

Erdogan has allegedly insisted that in exchange for Brunson, the probes be dropped.

The yield on a Turkish government bond maturing in February 2028 surged by nearly a percentage point to highs of 9.347 per cent at the time of writing, according to Tradeweb. Over the past five years Turkey's growth has been virtually keeping pace with that of China and India but it is now displaying the classic signs of overheating: a large trade deficit, a construction boom and soaring debt. Zarrab, who pleaded guilty, cooperated as a witness for the state. In particular, the report flags that Spain's BBVA, Italy's UniCredit and France's BNP Paribas, all of which have significant operations in Turkey, are especially exposed. But in what now seems like a gross miscalculation, Erdogan held out for more. It confirmed that Kuwait's Finance Minister Nayef Al-Hajraf met with Albayrak at Kuwait International Airport on Sunday evening. "The dynamics of the Turkish economy are solid, strong and sound and will continue to be so". The lira has lost more than 45 percent of its value this year. Erdogan also rebutted the rumors.

The lira's plunge and subsequent sell-off in Turkey is giving investors an unwelcome reminder of past crises in emerging markets, rattling nerves worldwide and leaving traders speculating on how bad contagion can get. On Wall Street, investors have responded to Turkey jitters by selling equities and buying government bonds.

Days later, the U.S. imposed sanctions against Turkey's interior and justice ministers using legislation drawn up to punish foreign officials following the death of a lawyer in Russian jail.

Aidan Yao, senior emerging Asia economist at AXA Investment Managers, said the chance that the Chinese government would extend aid to Turkey was not small, but would be based on political rather than economic calculations given the risks that would be associated with such a move.

The Turkish president's standoff with Trump has fuelled concerns of a foreign policy shift that would result in Turkey leaving North Atlantic Treaty Organisation, forging stronger political links with Russia, China and Iran, and allowing the three million Syrian refugees living in Turkey to leave for the EU. "The relationship is now out of the hands of those [US officials] who traditionally manage it", a congressional source speaking on condition of strict anonymity told Al-Monitor. "Some close the doors and some others open new ones", he said.

Other reports by Click Lancashire

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