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Turkey’s lira crisis threatens to undermine global economy

15 August, 2018, 11:26 | Author: Melinda Barton
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The call from businesses came as Erdogan demanded a boycott of Apple and other USA -made products in an effort to hurt the United States.

The Middle East's largest economy has been targeted by the US just like other nations around the world, including Canada, Erdogan said.

"You act on one side as a strategic partner but on the other you fire bullets into the foot of your strategic partner", Erdogan further said, addressing Trump.

Bloomberg News noted that Vestel's phones use American-made components, so it might have trouble rising to Erdogan's challenge over the long term, but in the short term, the company's stock rose nine percent after Erdogan's speech.

Earlier this month, the United States imposed sanctions on two top officials in President Recep Tayyip Erdogan's cabinet in an attempt to get Turkey to turn over Brunson.

The latest blow came on Friday, when US President Donald Trump said he had approved the doubling of tariffs on Turkish steel and aluminium.

Neither the White House, Turkey's Ministry of Foreign Affairs nor Apple immediately responded to a request for comment.

That was a rare Trump understatement, as the two countries face sharp differences on the case of Brunson and other detained Americans, Erdogan's consolidation of power, USA support for Kurds in Syria, growing Turkish relations with Russia, Turkey's evasion of US sanctions and more.

"We supported him with our lives on 15 July", shopkeeper Arif Simsek said, referring to a failed 2016 military coup.

The ruckus between Turkey and the United States has impacted on other countries' currencies, including the Indian rupee, as investors fear the lira's wobbles could spread to developing nations.

That is an unsubtle plea for the courts to end the U.S. -Turkey standoff by taking the Brunson decision out of Erdogan's hands. It also pledged to provide "all the liquidity banks need".

Erdogan also said that the country could depend on Venus and Vestel, two of Turkey's domestic smartphone brands.

White House press secretary Sarah Sanders said the USA had seen "no evidence that Pastor Brunson has done anything wrong".

The problem with Erdogan's new strategy is that it will have a much greater effect on the Turkish people than any US company.

The impasse led to the depreciation of the Turkish lira, which lost 25 per cent of its value in August and impacted on other countries' currencies as well, including the Indian rupee, as investors feared the lira's wobbles could spread to developing nations.

While Erdogan didn't address their concerns in his speech, he said Turks have already begun converting foreign exchange into Turkish lira because it would be tantamount to "surrendering" if they did otherwise.

US-Turkish relations have been hurt by a series of issues from diverging interests in Syria, Ankara's plan to buy Russian defence systems and the detention of pastor Brunson.

After three weeks of heavy pounding, the lira got some respite as signs Turkish authorities were trying to address the unresolved damage triggered an nearly 5-per-cent relief rally to about 6.5 per dollar.



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