Turkey is boycotting iPhones, but it hurts Turkey more than Apple

Aug 15, 2018, 02:51
Turkey is boycotting iPhones, but it hurts Turkey more than Apple

"From Monday morning onwards our institutions will take the necessary steps and will share the announcements with the market", Berat Albayrak said.

Turkey's currency crisis sent world markets reeling as investors in emerging markets sought safety in government bonds and the dollar. Now the many contradictions in his policy positions are coming to a head, with unpredictable implications for Syria, Iran, Nato and already strained relations with Europe.

This follows tariffs emplaced on Turkish metal exports last week by President Donald Trump which has caused a freefall of the Turkish Lira. Stock markets are feeling the pressure that is likely to affect emerging market economies ...

"Significantly more than just official promises of action are needed to exit the current crisis", said Andy Birch, principal economist at IHS Markit, calling for "a sharp central bank rate rise". There is no economic reason.

The euro exchange rate has weakened due to concern about the broad exposure of European businesses to the deteriorating economy in Turkey.

The Turkish lira hit a record low of 7.23 per dollar on Sunday, after President Recep Tayyip Erdogan remained defiant in a standoff against its North Atlantic Treaty Organisation ally the United States.

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Erdogan appealed to a crowd in the city of Bayburt to exchange dollars and gold for Turkish lira to prop up the plunging currency. European stocks closed sharply lower on Friday amid fears that problems in Turkey could infect other eurozone countries.

"I am specifically addressing our manufacturers: Do not rush to the banks to buy dollars", he said.

"We are together in North Atlantic Treaty Organisation and then you seek to stab your strategic partner in the back".

Speculators, sensing an opportunity to make a quick profit, have piled into the market, "shorting" the lira and the Turkish stock market, that is, betting that they will fall further. The tariffs themselves are minor and impact around $1 billion (€875 million) in trade, but they weighed on market confidence in the vulnerable Turkish economy.

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.

Investors are anxious that Turkish companies that borrowed heavily to profit from a construction boom may struggle to repay loans in dollars and euros, since the weakened lira means there is now more to pay back.

Turkey asked the United States to get a prisoner out of Israeli jail, which the USA did the next day, according to The Guardian.

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The Trump administration has done so despite the likelihood that this will bring forward the date by which Turkey will default on its debt and impose exchange controls. The Trump administration introduced the economic sanctions as the result of an American Christian pastor who is now standing trial on alleged terrorism charges.

He has been detained for almost two years on charges of supporting the Kurdistan Worker's Party (PKK), the group said to be behind a coup attempt in 2016 which has waged a four-decade fight against Turkey.

He said: "They have done this before".

The European Central Bank is understood to be anxious about the exposure of eurozone banks to Turkey, with Spain's BBVA, Italy's Unicredit and France's BNP Paribas thought to be in the firing line. Not only would this help contain inflation but it would also help support the lira.

The route of hiking rates now appears cut off to the nominally independent central bank which is ready to use virtually any policy tool save this one, raising fears Erdogan has the bank under his influence.

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