Erdogan under pressure as Turkish lira plunges to record low

President Erdogan has defied market calls for an interest rate increase. (AFP/ Turkish presidential press service)
Updated 15 August 2018
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Erdogan under pressure as Turkish lira plunges to record low

  • The lira dived to record lows of 7.24 to the dollar and 8.12 against the euro very early on Monday
  • The lira had tumbled about 16 percent against the dollar on Friday

NEW YORK: Turkey’s President Recep Tayyip Erdogan came under renewed pressure on Monday to reverse his economic policies as the troubled lira tumbled to record lows against the euro and dollar.

The US dollar, Japanese yen and the Swiss franc have been the preferred safe havens for scared investors.

The lira dived to record lows of 7.24 to the dollar and 8.12 against the euro very early in the day, then recovered somewhat after Turkey’s central bank announced a raft of measures aimed at calming markets, only to slip back again late in the session.

“The attempts by Turkey to halt the demise of the lira and the country’s soaring bond yields have proven inadequate thus far,” said David Cheetham, chief market analyst at XTB.

“Investors remained fearful on Monday over the Turkish lira’s precipitous plunge — and the concerns that a financial crisis in the country would ripple through the rest of Europe,” Spreadex analyst Connor Campbell said.

Sharp depreciation

“So far the impact of the lira crash has been limited in Europe and the rest of the world,” said Agathe Demarais, Turkey analyst at The Economist Intelligence Unit.

“However, within a few months Western banks that have strong ties with Turkey will feel the impact of the crisis as Turkish corporates will struggle to repay debt in foreign currency.

“The sharp depreciation of the lira has almost doubled the local currency value of external debt repayments since the start of the year.” 

The lira had tumbled about 16 percent against the dollar on Friday, after US President Donald Trump doubled tariffs on steel and aluminum from Turkey.

The crisis has been sparked by a series of issues including a faltering economy — Erdogan has defied market calls for an interest rate increase — and tensions with the United States, which has hit Turkey with sanctions over its detention of an American pastor.

‘Black Friday’

In its first statement since what was dubbed “Black Friday” in Turkey, the nation’s central bank said on Monday it was ready to take “all necessary measures” to ensure financial stability, promising to provide banks with “all the liquidity” they need.

The central bank also lowered reserve requirement ratios for banks, in a move also aimed at staving off any liquidity issues.

But the statement gave no clear promise of rate increases, which is what most economists say is needed.


Air France, Emirates maintain Cairo flights after British Air suspension

Updated 21 July 2019
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Air France, Emirates maintain Cairo flights after British Air suspension

  • British Airways, a unit of IAG, said it was suspending flights to Cairo for seven days “as a precaution”
  • Germany’s Lufthansa later said it had canceled its flights to Cairo from Munich and Frankfurt and would resume its connection

PARIS: Air France, Emirates and Etihad Airways are continuing to operate flights to Cairo after British Airways and Lufthansa suspended services to Egypt’s capital.
International Airlines Group’s British Airways suspended flights on Saturday for seven days “as a security precaution” as it reviews security at Cairo airport.
Germany’s Lufthansa later said it canceled services from Munich and Frankfurt to Cairo and would resume flights on Sunday.
“In liaison with the French authorities and the local authorities in Egypt, Air France has decided to maintain its service to Cairo,” a spokesman said in a statement sent to Reuters.
An Emirates spokeswoman said its flights were operating to schedule.
“We are closely assessing the situation and are in contact with the relevant aviation authorities with regards to our flight operations to Egypt,” the spokeswoman said.
The website for Abu Dhabi’s Etihad showed its services were also operating.
“Etihad Airways is monitoring the security situation in Cairo,” an airline spokesman said.