Economy

Turkish lira rebounds taking pressure off world stock markets

Turkish lira rebounds taking pressure off world stock markets

The evangelical pastor is accused of terrorism charges and aiding the network of a US -based Islamic preacher blamed by Ankara for masterminding a coup attempt in July 2016 against Turkish President Tayyip Erdogan.

Turkish President Tayyip Erdogan had said on Tuesday that Ankara would boycott electronic products from the United States, retaliating in a row with Washington that has helped drive the lira to record lows. Behind the scenes, however, diplomats resumed contact to ease tensions.

Erdogan, however, did not announce any government action towards a boycott.

Asian stocks retreated to a one-year low on Wednesday as bearish Chinese markets worsened investor sentiment already hurt by Turkey's financial crisis.

"We will boycott USA electronic goods", Erdogan said in a speech in Ankara, again showing no sign of compromise in the dispute. He suggested Turks would buy local or Korean phones instead of USA -made iPhones, though it was unclear how he meant to enforce the boycott. In addition, the USA has placed sanctions on two Turkish ministers over the arrest of an American pastor who is charged with having links to terrorism.

Behind the scenes, however, diplomatic dialogue appears to have resumed.

"The lira even managed to claw back some lost ground. allowing stock and commodity markets to recover".

The current crisis was sparked by Ankara s refusal to release pastor Andrew Brunson, who is now under house detention on terror-related charges and espionage. Central banks try to ignore politics when making economic decisions.

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The crisis has been sparked by a series of issues including a faltering economy - the central bank has defied market calls for rate hikes - and tensions with the U.S., which has hit Turkey with sanctions over its detention of an American pastor. In a joint statement issued yesterday, the industrialists' group Tusiad and the Union of Chambers and Commodity Exchanges also called for diplomatic efforts to resolve the spat with the USA and improve relations with the EU, Turkey's major trading partner. He again described the currency crisis as an attack on Turkey and said that a lack of a run on the banks indicated that an alleged conspiracy had been successfully "repelled". An upper court had yet to rule on the appeal, his lawyer told Reuters.

Brunson, 50, is being tried on espionage and terror-related charges, which he and the US government vehemently deny.

Brunson faces up to 35 years in prison if found guilty.

The United States' top diplomat in Turkey, Jeffrey Hovenier, visited Brunson on Tuesday and called for his case - and those of others detained in Turkey - to be resolved "without delay" and in a "fair and transparent manner".

Treasury and Finance Minister Berat Albayrak, Erdogan s son-in-law, will speak with about 1,000 foreign investors on Thursday via a teleconference, the private NTV broadcaster said.

Global investors are anxious about Turkey's high amount of debt held in foreign currencies, especially the dollar.

Independent economists caution it would be hard to unseat the dollar as the top reserve currency as it is used widely in the global economy, for example to trade in oil and for commercial deals.

"In a lot of ways some of his actions have amplified this risk-off type of environment, which has ultimately helped the USA dollar strengthen in the near-term", said Charles Tomes, senior investment analyst and trader at Manulife Asset Management in Boston. Cavusoglu said ties with the bloc, long strained, were on a firmer basis and had started normalising.