Turkey’s battered lira tumbles again over outlook fears

The currency was trading at 6.2 to the dollar, a loss of 3.1 percent on the day. (AFP)
Updated 27 August 2018
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Turkey’s battered lira tumbles again over outlook fears

  • The lira has lost just under a third in value against the dollar over the last month
  • The central bank is unwilling to raise interest rates in the face of stringent opposition from President Recep Tayyip Erdogan

ISTANBUL: The Turkish lira on Monday lost over three percent in value against the dollar as the same concerns that have propelled the embattled currency to record lows failed to dissipate after a summer break.
The lira has lost just under a third in value against the dollar over the last month, as anxiety over the coherence of domestic economic policy coupled with sanctions announced by the United States generated market panic.
The currency was trading at 6.2 to the dollar, a loss of 3.1 percent on the day. It lost similar ground against the euro to trade at 7.2.
Turkish markets reopened on Monday after a week off for public holidays and the coming week will be crucial for the lira as European markets become more active after the summer break.
Analysts said that the same factors that at one point drove the lira above 7 to the dollar for the first time in history remain in place.
The government has yet to convince markets with a comprehensive economic strategy to fight inflation of almost 16 percent and a widening current account deficit.
The central bank is unwilling to raise interest rates in the face of stringent opposition from President Recep Tayyip Erdogan, raising concerns over its independence.
And the crisis with the United States is far from being resolved. Turkey is still holding American pastor Andrew Brunson under house arrest, one of the key factors behind the troubled ties between Ankara and Washington.
Jameel Ahmad, global head of currency strategy and market research at FXTM, predicted the lira would “remain under pressure for some time as the same structural concerns that terrified traders away from Turkish assets still remain unchanged.”
Market sentiment was further clouded by economists at JPMorgan Chase slashing their growth forecast for Turkey in 2019 to just 1.1 percent.
Treasury and Finance Minister Berat Albayrak, who is Erdogan’s son-in-law and his top pointman on the economy, was meanwhile holding talks in Paris with French counterpart Bruno Le Maire, his office said.


Full-blown US, China trade war to cost jobs, growth and stability — WTO’s Azevedo

Updated 25 September 2018
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Full-blown US, China trade war to cost jobs, growth and stability — WTO’s Azevedo

  • ‘A continued escalation of tensions would pose an increased threat to stability, to jobs and to the kind of growth that we are seeing today’
  • ‘There would be no winners from such a scenario and every region would be affected’

BERLIN: A full-blown trade war would have serious effects on global economic growth and there would be no winners of such a scenario, the director-general of the World Trade Organization (WTO), Roberto Azevedo, said on Tuesday.
Speaking at a Berlin industry event against the backdrop of growing trade tensions between China and the US, Azevedo said: “The warning lights are flashing. A continued escalation of tensions would pose an increased threat to stability, to jobs and to the kind of growth that we are seeing today.”
A full-blown global trade war with a breakdown in international trade cooperation would reduce global trade growth by around 70 percent and GDP growth by 1.9 percent, Azevedo said.
“There would be no winners from such a scenario and every region would be affected,” Azevedo said. The European Union itself would have about 1.7 percent taken off its GDP growth, he said, adding: “Clearly, we cannot let this happen.”
Azevedo pointed to several reform proposals that addressed trade-distorting practices and the WTO’s existing mechanisms to resolve trade disputes, adding that members had to agree on which reforms they wanted to focus on.
“Clearly, this informed debate is gaining significant momentum and that is positive,” Azevedo said, adding the G20 summit in Buenos Aires in November would be crucial to agree on the next steps to safeguard the rules-based free trade order.
“Of course, the system can be better, in fact it must be better. But it’s nonetheless vital. So while we work to improve it and ensure that it’s more responsible to evolving economic needs, we must also preserve what we have — and I count on your support to that end,” he said.