Turkish lira tumbles after US halts F-35 equipment delivery

Washington’s step to block delivery of the jet comes amid fears in the US and other NATO allies, that radar on the Russian S-400 missile system will learn how to spot and track the F-35. (Shutterstock)
Updated 02 April 2019
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Turkish lira tumbles after US halts F-35 equipment delivery

  • The lira has been volatile in the uncertain aftermath of local government elections
  • US officials have told their Turkish counterparts they will not receive further shipments of F-35 related equipment

ISTANBUL: The Turkish lira weakened more than 2 percent on Tuesday, briefly reaching 5.6125 against the dollar, after the US halted delivery of equipment related to the F-35 fighter aircraft to Turkey.
The lira stood at 5.5570 against the US currency in early London trade, compared with a close on Monday of 5.4913.
The lira has been volatile in the uncertain aftermath of local government elections, weakening 2.5 percent on Monday to 5.7 to the dollar before recovering ground.
In Istanbul, both the main opposition Republican People’s Party (CHP) and President Tayyip Erdogan’s AK Party claimed victory in the mayoral elections. Later, both candidates said CHP’s Ekrem Imamoglu was around 25,000 votes ahead, but the AKP said it was filing objections to the results.
US officials have told their Turkish counterparts they will not receive further shipments of F-35 related equipment needed to prepare for the arrival of the stealth fighter aircraft, sources told Reuters on Monday.
Washington’s step to block delivery of the jet comes amid fears in the US and other NATO allies, that radar on the Russian S-400 missile system will learn how to spot and track the F-35, making it less able to evade Russian weapons.
“The lira is under pressure as now the focus is back on structural problems for the Turkish economy,” said Nikolay Markov, a senior economist at Pictet Asset Management.
The widening current account deficit could deepen Turkey’s economic recession through a further depreciation of the currency leading to higher inflation and borrowing costs, Markov said.
“The central bank should raise policy rates but that won’t happen because of pressure from the government,” although AK Party losses in the cities could reduce the pressure authorities were able to exert on the bank, he said.


Singapore woes ring trade alarm bells

Singapore has long been viewed as a barometer of the global demand for goods and services. (AFP)
Updated 22 July 2019
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Singapore woes ring trade alarm bells

  • Governments have slashed economic growth forecasts, and gauges in several countries measuring activity in the manufacturing and services sectors paint a bleak picture

SINGAPORE: A plunge in exports and the worst growth rates for a decade have fueled concerns about the outlook for Singapore’s economy, with analysts saying the figures offer a warning that Asia is heading for a slowdown as China-US tensions bite.
While it may be one of the smallest countries in the world, the export hub is highly sensitive to external shocks and has long been viewed as a barometer of the global demand for goods and services.
The affluent city-state is highly dependent on trade and has traditionally been one of the first places in Asia to be hit during global downturns — with ripples typically spreading out across the region. The latest signs are not good. In June, exports collapsed 17.3 percent from a year earlier, the fastest decline in more than six years, led by a fall in shipments of computer chips.
That followed a shock 3.4 percent quarter-on-quarter contraction in GDP in the second quarter. Year-on-year growth came in at just 0.1 percent, the slowest pace since 2009 during the global financial crisis.
“Singapore is the canary in the coal mine,” Song Seng Wun, a regional economist with CIMB Private Banking, told AFP. “And what it tells us is that it is a tough environment.”
To warn of danger, miners used to bring caged canaries underground with them as the birds would die in the presence of even a small amount of poisonous gas — signaling to workers that they should make a swift exit.

BACKGROUND

In June, exports in Singapore collapsed 17.3 percent from a year earlier, the fastest decline in more than six years, led by a fall in shipments of computer chips.

While steadily weakening growth in China is partly to blame for a slowdown in exports, analysts say the trade war between the US and China has dramatically worsened the situation.
While Singapore — a transit point for products heading to and from Western markets as well as the Asian base for manufacturers of some hi-tech goods — may be showing the strain most, negative data has emerged throughout the region.
Exports have been slipping across Asia. In India they plummeted 9.7 percent in June, in Indonesia, Southeast Asia’s biggest economy, they dropped 8.9 percent in the same month while in South Korea they slipped 10.7 percent in May.
Governments have slashed economic growth forecasts, and gauges in several countries measuring activity in the manufacturing and services sectors paint a bleak picture.
Central banks are moving to spur domestic consumption, with Indonesia and South Korea cutting interest rates Thursday, the latest in Asia to lower borrowing costs.
Singapore’s central bank is seen as likely to ease monetary policy at an October meeting, and some economists are predicting the country could fall into recession next year.
“There are no winners in this trade war. While most of the attention has focused on the trade conflict between China and the US, the damage has not been confined to these two economies,” business consultancy IHS Markit said in a commentary.