News World Turkish lira weakens, Moody's delivers more downgrades

Turkish lira weakens, Moody’s delivers more downgrades

The Turkish lira weakened on Tuesday as investors weighed upTurkey‘s efforts to manage its rift with the United States after Finance Minister Berat Albayrak said U.S. trade sanctions against Ankara could destabilise the Middle East.

The currency has lost about 38 percent of its value against the dollar this year due to a sell-off accelerated by a row with Washington over an American evangelical Christian pastor detained inTurkey on terrorism charges.

More broadly, investors are worried about the direction of monetary policy under President Tayyip Erdogan. The president, a self-described “enemy of interest rates” has repeatedly put public pressure on the central bank and picked Albayrak, his son-in-law, as finance minister.

The attendant sell-off in the lira has raised concerns about the impact on the broader economy – given Turkey‘s reliance on dollar-denominated energy imports – and a possible surge in bad loans in the banking sector.

At 1527 GMT, the lira stood at 6.2561 against the dollar, weakening from a close of 6.1200 on Monday, when it weakened to near 6.3 before rebounding in its first day of trade after a week-long holiday.

The main stock index rose 2.83 percent by Tuesday’s close to 93,866.94 points.

“At this point in time Turkey has become pretty much un-tradable,” said Tim Ash of BlueBay Asset Management in emailed comments. “The market wants to see specific delivery on policy whether that is monetary, fiscal or action to clear up problems in the banking sector.”

Germany denied a report that it might provide financial aid to Turkey to help it weather the currency crisis.

Also on Tuesday ratings agency Moody’s downgraded 20 Turkish financial institutions, saying there were signs of substantial increase in risk of a downside scenario. It said Turkey‘s operating environment had deteriorated beyond previous expectations.

Facing economic pressure from the United States, Turkey has signalled a wish to improve strained ties with the European Union, which it still aspires to join despite disagreements.

After meeting his French counterpart in Paris on Monday, Albayrak also took aim at the United States, saying U.S. sanctions could ultimately aggravate the region’s terrorism and refugee crises..

Both Erdogan and Albayrak are also set to visit Germany at the end of September.

The Wall Street Journal reported that Germany was in early stage talks to provide emergency financial aid to Turkey, fearing its economic troubles could spread to Europe and further destabilise the Middle East. But a German official denied this.

“You can’t do much from the outside but to stress that Turkey must reform itself,” a second official told Reuters.

U.S. President Donald Trump this month authorised a doubling of duties on aluminium and steel imported from Turkey, triggering retaliatory measures from Ankara.

Investors are also worried by a U.S. Treasury investigation into state-owned Turkish lender Halkbank, which could face a potentially hefty fine over allegations of busting sanctions on Iran. The bank has said all its transactions were legal.

Turkey and the United States are also at odds over their diverging interests in Syria and U.S. objections to Ankara’s plan to buy Russian defence systems.

Separately, Ankara announced a new campaign on Tuesday to support the real estate sector, offering a 10 percent discount on some home sales. Under the campaign, any price increases due to rising exchange rates will be discounted from the cost of the residence, the environment and urbanisation minister said.

Top Stories

Coronavirus: 109 new cases, two deaths on Tuesday

The Health Ministry on Tuesday announced the death of two people in Cyprus due to Covid-19. This raises the Mediterranean island’s death toll from the...

Health Minister to announce process of covid measures relaxation on Wednesday

Health Minister Constantinos Ioannou on Wednesday will announce the way the strict coronavirus measures now in effect in Cyprus will be gradually relaxed after...

Scientists in Greece find 20 million year-old petrified tree

Greek scientists on the volcanic island of Lesbos say they have found a rare fossilized tree whose branches and roots are still intact after...

Turkey bans parties at ski resorts after Covid curfew backlash

Turkey has banned music and parties at ski resorts after footage of crowded party scenes provoked anger in a country which has endured two months...

EMGF Agreement set to be ratified on Thursday

The House Foreign Affairs Committee on Tuesday decided to speed up the ratification of the Intergovernmental Agreement on the Statute of the East Mediterranean...

Taste

Squash soup

Ingredients: 1 kg pumpkin, cut into small cubes, approximately 5 cups 2 medium (400g) sweet potatoes, cut into cubes, approximately 2 ½ cups 1 chopped leek, only...

Mezedes

No visit to Cyprus is complete without enjoying the traditional meal of many small dishes known as ‘meze’. This large feast, which has been a...

Prawns with fried cheese, barley shaped pasta

Put the barley shaped pasta into a small pan with salted water, bring to a boil and when tender, drain. Peal the prawns leaving...

Salmon and shrimp sheftalies

Mix all ingredients for tabbouli in a bowl and keep to one side so flavours can combine. Prepare the sheftalies: wash and soak the casing...