Published: Tue, August 14, 2018
Money | By Armando Alvarado

Erdogan under pressure as Turkish lira plunges to record low

Erdogan under pressure as Turkish lira plunges to record low

"We fail to see how the crisis can be resolved without external support", but an International Monetary Fund support package will be hard "given Turkey's current political situation".

"There's a risk-off mood generally triggered by the Turkish currency sell off, and we are seeing a wider sell-off now, and it's looking pretty ugly in other emerging markets as well", said Investec economist Philip Shaw. Asian markets fell overnight, while European markets were slightly lower.

Still, in a sign that investors are still trying to work through the implications of Turkey's meltdown, the rupee hit the 70-per dollar mark, a record low, as emerging-market currencies remained under pressure.

Stocks were on a five-week winning streak before last week.

The Turkish lira has nosedived in value in the past week over concerns about Erdogan's economic policies and after the United States slapped sanctions on Turkey angered by the continued detention of Mr Brunson.

"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 Markets.com. Erdogan's refusal is one of several factors worrying investors. The Argentine peso sank to an all-time low amid investor caution and a corruption scandal involving former government officials.

Speaking at a symposium organized by the Foundation for Political, Economic and Social Research (SETA) in the capital Ankara, Erdoğan said: "For each product we buy from overseas with foreign currencies, we will manufacture better ones and sell them overseas".

Energy and industrial companies took some of the worst losses, while technology companies held up better.

A stronger dollar hurt exporters, whose goods will get more expensive overseas.

But Fiona Cinoctta, senior market analyst at City Index, said the Turkish government only has a few days to stem the crisis before it started spilling out into other markets.

Watch Perseid Meteor Shower 2018 Online
So every shooting star you see is a tiny messenger from that giant comet Swift-Tuttle long before we invented the alphabet. As Cooke concluded: "As long as you have clear skies and you're away from the city, you should have a good show".

So far, the impact on developed economies has been relatively contained. The Dow Jones Industrial Average was down roughly 150 points while the S&P 500 had fallen roughly 0.5 percent before making up ground by Monday afternoon. The Nasdaq composite fell 0.2 per cent to 7,819.71.

Mr Albayrak said the country would "act in a speedy manner" and its plan included help for the banks and small and medium-sized businesses most affected by the dramatic volatility in the lira.

What do South Africa and Mexico have to do with the current crisis engulfing the Turkish lira?

Stocks were on a five-week winning streak before last week, and strong corporate earnings reports were a big factor.

He said the USA would not achieve aims by exerting pressure and imposing sanctions on Turkey.

In corporate news, German conglomerate Bayer took a dive after a USA jury ruled against its Monsanto unit on Friday and awarded US$289 million to a former school groundskeeper who said that exposure to Monsanto's Roundup weed killer caused cancer.

Trading in Germany, Bayer tumbled 10.3 per cent.

Investors have grown increasingly concerned about President Tayyip Erdogan's growing control over the economy and a deepening diplomatic rift with the United States, with the concerns snowballing into a market panic last week. "We will implement these", he said.

Trump had also declared that "Our relations with Turkey are not good at this time!"

Like this: