Turkey to Seek ‘New Markets, Allies’ After Currency Crash

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AUG 12, 2018: Turkish President Recep Tayyip Erdogan has warned of far-reaching consequences in the event the United States continues to disrespect Ankara, according to his op-ed in the New York Times.

“Unless the United States starts respecting Turkey’s sovereignty and proves that it understands the dangers that our nation faces, our partnership could be in jeopardy,” he warned.

Erdogan demanded that Washington –it’s Nato ally, should “give up the misguided notion that our relationship can be asymmetrical and come to terms with the fact that Turkey has alternatives.”

“Failure to reverse this trend of unilateralism and disrespect will require us to start looking for new friends and allies. You can never bring this nation in line with the language of threats,” Erdogan underscored.

The remarks echoed those made by Erdogan during a provincial meeting of his ruling AK Party in the Black Sea coastal town of Rize earlier this week.
During the speech, he specifically expressed regret over the fact that America “chooses a pastor” over its “strategic partner in NATO.”

Separately, Erdogan addressed the issue of the Turkish lira nosediving to a record low, urging citizens to shore up the national currency.

“If there are dollars under your pillow, take these out. If there are euros, take these out. Immediately give these to the banks and convert to Turkish lira and by doing this, we fight this war of independence and the future. Because this is the language they understand,” he pointed out.

Erdogan’s remarks came after US President Donald Trump tweeted that he had authorized a doubling of tariffs on steel and aluminum imports from Turkey, also praising “the very strong dollar” and referring to the Turkish lira’s collapse.

The exchange rate of the Turkish lira has, meanwhile, plummeted more than 33 percent against the US dollar, reaching an all-time low following Trump’s announcement (tweet) last week which saw Lira tumble 15% in one single day.

Since August a year ago, the currency’s value has almost halved from $1 fetching 3.52 Turkish lira to recently fetching 6.43 lira.

With financial turmoil in Turkey roiling the country’s assets, analysts are busy contemplating which other countries could be exposed and what this could mean for international investors.

Data from the Bank for International Settlements (BIS) — often called the central bank of central banks — shows that Spanish banks are owed $83.3 billion by Turkish borrowers; French lenders $38.4 billion; and banks in Italy are owed $17 billion. Regulators in Europe are reportedly worried that the weaker currency will lead to defaults in foreign loans.

Timothy Ash, a senior emerging markets strategist at Bluebay Asset Management, told CNBC exposure is “pretty international.” “European, U.S., Japan, China, Middle East — everyone.”

Washington earlier imposed sanctions against Turkey’s Minister of Justice Abdulhamit Gul and Minister of Interior Suleyman Soylu for participating in the detention of US pastor Andrew Brunson, suspected of being connected to the movement of Fethullah Gulen who is in turn accused of orchestrating the 2016 failed military coup in Turkey.

With Washington claiming that Brunson was jailed unlawfully, Ankara is promising to freeze the US Justice and Interior Secretaries’ assets in Turkey in retaliation for the sanctions.

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