Economy

Turkey prepares action plan for banks and businesses to tackle economic woes

Turkey prepares action plan for banks and businesses to tackle economic woes

Earlier in Asia on Monday, the lira had traded at a new low of 7.24 to the dollar.

"We will give our answer, by shifting to new markets, new partnerships and new alliances", he said. "We are taking the necessary steps against these attacks and will continue to do so".

He has threatened to seek new alliances - a veiled hint at closer ties with Russia, Qatar or China for support, which would further loosen the already weakened ties between a strategically vital North Atlantic Treaty Organisation member and the west.

Erdogan also ruled out the possibility of higher interest rates, as they can slow economic growth.

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.

It also pledged to provide "all the liquidity banks need".

In times of high uncertainty, banks tend to shy away from lending to each other.

"In general, the size of Panda bonds, or any single bond issuance in any other currencies, is likely to be far too small to have any impact on either the Turkish lira or onshore yuan or China's RMB internationalisation agenda", said Becky Liu, head of China macro strategy at Standard Chartered.

Emerging market stocks lost 2.11 per cent. As interest rates rise in the US, investors pull their money out of countries that had enjoyed strong economic growth but are perceived as somewhat riskier.

But now with every one percent the lira loses, the dollar debt automatically rises- as shown in a graph - meaning the first Turkish companies can no longer meet their financial obligations and have had to restructure their loans.

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ANZ bank analysts attributed the euro's wilt in part to "contagion risks" centered on Spanish, Italian and French banks which are exposed to Turkish foreign currency debt.

"The US is a relative beacon of strength with stable to improving economy".

Among the most important things investors are watching out for is whether Turkey, in an effort to stymie the outflow of capital from the country, puts limits on money flows.

President of Turkey Recep Tayyip Erdogan addresses during a luncheon for participants of 10th Ambassadors' Conference at Presidential Complex in Ankara, Turkey on August 13, 2018.

The dispute with the United States has centered on the continued detention of an American pastor who is on trial for espionage and terror-related charges. Also, a diplomatic spat with the U.S. is resulting in sharply higher tariffs on Turkish steel and aluminum.

Turkey and the USA are now experiencing rocky relations following Washington's imposition of sanctions on Interior Minister Suleyman Soylu and Justice Minister Abdulhamit Gul for not releasing American Pastor Andrew Brunson, who faces terrorism charges in Turkey.

"We expect the United States to be faithful to our traditional friendly relations and North Atlantic Treaty Organisation alliance", Mevlut Cavusoglu said in his opening speech at the 10th Ambassadors' Conference in the capital Ankara. The Interior Ministry said it initiated legal investigations against 346 social media accounts "which posted content provoking the dollar exchange rate".

In contrast, the Turkish economy grew by 7.4 percent a year ago - quicker than financial growth champions China and India.

Separately, the Istanbul and Ankara prosecutor's offices launched investigations into individuals suspected of being involved in actions that threaten Turkey's economic security, broadcaster CNN Turk and state news agency Anadolu reported.


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