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.


Deutsche Bank appoints Riyadh GM

Updated 18 September 2018
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Deutsche Bank appoints Riyadh GM

  • German banking titan expects more deal flow from Kingdom
  • Deutsche Bank established base in Saudi Arabia in 2006

LONDON: Deutsche Bank has appointed Mohammed Alajmi as general manager of Deutsche Bank Riyadh Branch in Saudi Arabia.
He will have oversight of the bank’s business regulated by the Saudi Arabian Monetary Authority (SAMA), Deutsche Bank said in a statement.
The German banking giant originally established its Riyadh branch in 2006.
Alajmi joined Deutsche Bank in 2012 after more than a decade of working at local financial institutions in the Kingdom.
He was appointed chief operating officer in June 2015 overseeing the bank’s activities across all businesses and infrastructure functions.
The group expects to boost regional hiring this year, driven by expected corporate bond sales and initial public offerings, Bloomberg reported in February.