Turkish central bank raises rates sharply to prop up lira

President Erdogan has said he wants to take more control of the country’s economy (AFP)
Updated 24 May 2018
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Turkish central bank raises rates sharply to prop up lira

  • Turkey's central bank announces a sharp hike in interest rates to boost the embattled lira
  • The bank said after an emergency meeting of its monetary policy committee it was raising the late liquidity window (LLW) lending rate from 13.5 percent to 16.5 percent

ANKARA: Turkish President Recep Tayyip Erdogan is facing a potentially severe crisis just a month ahead of elections over the sharp depreciation of the lira which risks buffeting his campaign and even influencing voters.
In an indication of the severity of the situation, the central bank hiked one of its key interest rates 300 basis points (bps) after an emergency meeting on Wednesday, after inaction for days amid Erdogan’s opposition to rate rises.
Erdogan has always painted himself as a champion of the Turkish economy, pointing to how growth and investment have expanded under his rule after the misery of Turkey’s 2000-2001 financial crisis.
But the lira’s depreciation by nearly 19 percent against the US dollar since the snap polls were called on April 18 may signal the economy could be a burden, rather than a boost, for Erdogan.
The Turkish strongman, a doughty campaigner and so far undefeated at the ballot box in any poll, has been strangely reticent in this campaign although his team emphasises his rallies will get fully under way on Saturday.
And when he speaks to the crowds in town squares nationwide, Erdogan will have to now confront people’s fears that the external value of the money in their pocket is crumbling.
“For Turks, a weak currency translates into a weak economy, so it’s difficult to see how this will not hurt Erdogan and the AKP (ruling party) even though their voter base is fairly loyal,” said Atilla Yesilada, country adviser at Global Source Partners in Istanbul, said.
Although the country was the fastest growing in the G20 in 2017, recording 7.4 percent growth, concerns remain over the economy overheating, the widening current account deficit and double-digit inflation. Inflation is currently at 10.85 percent.
Erdogan himself has spooked the markets by saying he plans a greater say in monetary policy — despite the nominal independence of the central bank — after the polls.
The central bank move to raise the late liquidity window (LLW) lending rate from 13.5 percent to 16.5 percent prompted a sharp rally in the value of the lira.
Even though the June 24 polls come at a time of strains with the West and the Turkish army is fresh from a successful operation inside Syria, pollsters’ surveys show the economy is the issue of most concern to Turks.
In polling done earlier this month by Ankara-based MAK Consultancy, 45 percent of 5,400 respondents told researchers the country’s most significant issue was the economy.
Another survey last month by Gezici pollster found 48.6 percent said economic woes were Turkey’s biggest issue.
And Turks’ faith in their economy is falling: the consumer confidence index dropped by 2.8 percentage points in May to 69.9 from 71.9 in April, according to the Turkish statistics office on Wednesday.
“Globally, it is shown that the economic performance has an immediate impact on voting behavior. Hence, the sizeable economic costs may have an impact on voting behavior,” Selva Demiralp, associate professor of economics at Koc University in Istanbul, told AFP.
She warned it was “hard to predict how the economy will evolve in the near future.”
Yesilada added: “If this exchange rate shock translates into weaker economic performance they will lose some more votes and the spectre of AKP losing power could become a reality in a fair election.”
Analysts have long said Erdogan’s administration has been split between pro-market pragmatists like Deputy Prime Minister Mehmet Simsek, a former Merrill Lynch strategist, and advisers known for outlandish statements such as Yigit Bulut.
The central bank’s decision ended days of suspense on the markets over whether it would raise rates after Erdogan called for lower rates to boost growth.
“It’s high time to restore monetary policy credibility and regain investor confidence,” Simsek said on Twitter after the bank’s move.
“The Central Bank governor and members of the monetary policy committee have my full backing in doing what’s necessary to stem the slide in lira and achieve price stability,” he added.
Erdogan has often blamed outsiders for economic problems in Turkey, railing against unnamed actors trying to wage “economic terror” against the country.
Deputy Prime Minister Bekir Bozdag on Wednesday said voters were aware of the games being played.
“They are deluded if they think they can change the outcome of the election by playing with the dollar,” Bozdag said.


Samsung announces folding phone with 5G — at nearly $2,000

Updated 21 February 2019
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Samsung announces folding phone with 5G — at nearly $2,000

  • The device looks similar to a conventional smartphone, but then opens like a book to reveal a display the size of a small tablet
  • Samsung is also making improvements to its flagship Galaxy S devices and plans to offer a 4G version of its folding phone
SAN FRANCISCO/LONDON: Samsung Electronics Co. Ltd. on Wednesday unveiled a nearly $2,000 folding smartphone in a bid to top the technology of Apple Inc. and Chinese rivals and reignite consumer interest amid slumping sales.
The Galaxy Fold will go on sale on April 26 and take advantage of new and faster 5G mobile networks. The device looks similar to a conventional smartphone, but then opens like a book to reveal a display the size of a small tablet at 7.3 inches (18.5 cm).
The device “answers skeptics who said that everything that could be done has been done,” DJ Koh, chief executive of Samsung Electronics, said at an event in San Francisco. “We are here to prove them wrong.”
Samsung remains the world’s largest smartphone maker with nearly a fifth of global unit sales but underperformed a slumping market last year. Chinese rival Huawei Technologies Co. Ltd. — whose Mate series of phones also command premium prices — gained market share. Other Chinese makers like Xiaomi Corp. have also been increasing prices, leaving Samsung to defend its turf against upstart rivals in addition to its longtime foe Apple.
With the foldable phone, Samsung is going on the offense on two fronts in the smartphone race: It is offering an eye-catching new feature with the big, bending screen and the first 5G connection in a premium phone, a feature analysts do not expect Apple to match until 2020.
Samsung is also making improvements to its flagship Galaxy S devices and plans to offer a 4G version of its folding phone.
It also challenges the notion of what a phone can cost, debuting at nearly twice the price of current top-of-the-line models from Apple and Samsung itself.
Patrick Moorhead, founder of Moor Insights & Strategy, said the new folding device could help Samsung stay at the top and lure consumers to upgrade devices that have looked largely the same over the past five years.
“Samsung and Apple go back and forth” to lead the premium smartphone market, Moorhead said. “I think this is Samsung’s chance to take back the innovation crown.”
And even though the $1,980 starting price is steep, some dedicated Samsung fans said they would pay it. Navneet Kumar Singh, a Samsung enthusiast from India who traveled to San Francisco to watch the launch, is ready to place his order.
“The prices of the flagship models have been a little aggressive in India,” he said, “But in the end, if you invest the money you’re getting a different experience.”
Samsung also introduced several accessories to compete against Apple, including a pair of wireless headphones called Galaxy Buds. The headphones include wireless charging, a feature that Apple has promised to put into is competing AirPods but has not yet released.
Samsung also said that its new Galaxy phones will be able to wirelessly charge its headphones and new smartwatches by setting the accessories on the back of the phone.

10 times faster
Along with the folding phone, Samsung also added new cameras and a 5G version to its Galaxy series of phones.
Verizon Communications Inc. will be the first carrier to offer service for Samsung’s 5G phones. The networks are expected to be 10 times faster than current ones, improving viewing of live news and sports events.
With the 5G versions of its flagships, the Korean electronics maker looks to have beaten Chinese rivals in the 5G race, although the device will operate only on the small number of networks launching later this year. Apple is not expected to release a 5G smartphone until late 2020.
The new networks are not available in many places yet but will roll out this year and next. Consumers who want to hold on to their phones for several years before upgrading may be tempted to buy a 5G phone now so that it will be able to take advantage of those networks later, said Bob O’Donnell of TECHnalysis Research. That could sway some Apple buyers over to Samsung and other Android makers with 5G devices.
“People are going to be thinking about, am going to be able to use this a year from now? Two years from now? Three years?” he said.
Rival smartphone makers are expected to announce 5G models at next week’s Mobile World Congress, the industry’s top annual event, in Spain. Samsung said its 5G handset would be available in the early summer.
The Galaxy 10 series needs to appeal to consumers who are reluctant to upgrade for only incremental technological improvements in performance.
All of the Galaxy series of rigid phones except the 5G will be available from March 8, with the S10+ priced from $1,000, the S10 priced from $900 and the smaller S10e from $750.
The mainline S10 compares with $999 for Apple’s iPhone XS and $858 for Huawei’s premium Mate 20 Pro.