Markets rattled as Turkish lira dives

Markets rattled as Turkish lira dives

Turkish President Recep Tayyip Erdogan says his country will boycott US-made electronic goods amid a diplomatic spat that has helped trigger a Turkish currency crisis.

Turkey's president, Recep Tayyip Erdoğan, is opposed to raising interest rates to cool down the economy and support the currency, and has used his recent election victory to impose his unorthodox views on the country's central bank.

The weakness of the Turkish currency has rippled through global markets.

Concerns about contagion from the lira's plunge weighed on Asian stock markets on Monday, with 24 out of 26 Asian indexes reporting declines.

As Turkey's central bank attempted to shore up the financial system yesterday, Erdogan accused the United States of trying to "stab it in the back". In speeches Sunday, Erdogan remained defiant, vowing never to give in on interest-rate hikes. "We will implement a boycott on USA electronic products".

In its first statement since what was dubbed "Black Friday" in Turkey, the nation's central bank said on Monday it was ready to take "all necessary measures" to ensure financial stability, promising to provide banks with "all the liquidity" they need.

The current crisis was sparked by Ankara's refusal to release pastor Andrew Brunson, who is now under house detention on terror-related charges and espionage. "We will implement these", he said.

He has threatened to seek new alliances - a veiled hint at closer ties with Russian Federation - and warned of drastic measures if businesses withdraw foreign currency from banks.

The Turkish lira has nosedived over the past week and tumbled another 7 percent on Monday as the central bank's measures failed to restore investor confidence.

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Copper prices, meanwhile, often seen as a proxy for global economic growth, were down 1 percent at $6,131 a tonne.

Erdogan admitted the Turkish economy had problems - including a widening current account deficit and inflation of nearly 16 percent but added: "Thanks to God, our economy is functioning like clockwork".

Amid a row with Washington over an American pastor being detained by Turkish authorities, the US has sanctioned two Turkish officials, with Erdogan blaming "economic terrorists" for the market sell-off.

Trump and Erdoğan hammered out a deal for the USA to get Israel to release a Turkish woman imprisoned for alleged links to Hamas, and for Turkey to release detained United States pastor Andrew Brunson - or so Trump thought, sources tell The Guardian.

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

"I believe that would help to facilitate a solution, including to the economic problems", Maas said.

"The (lira) currency's travails and the timid response by the authorities has cast a dark cloud over European equities this morning, with the downbeat mood from Friday still pervading", said Neil Wilson, a market analyst at

Although the Turkish crisis is largely linked to foreign denominated debt, analysts have said that the willingness of the Turkish government to intervene in monetary policy is undermining the credibility of the central bank to reign over inflation and devaluation.

Soner Cagaptay, director of Turkish research programme at the Washington Institute, said the confrontation has now become between the leaders of the two countries, particularly over detained American pastor Andrew Brunson.