Fitch downgrades Turkey’s sovereign debt by one notch

A money changer counts Turkish lira banknotes at a currency exchange office in Istanbul, Turkey, in this file photo taken on August 2, 2018. (REUTERS)
Updated 15 July 2019

Fitch downgrades Turkey’s sovereign debt by one notch

  • The country also continues to run the risk of US economic sanctions triggered by delivery of Russian missile components

WASHINGTON: Ratings agency Fitch on Friday downgraded Turkey’s sovereign debt by one notch to ‘BB-‘ with a negative outlook, after President Recep Tayyip Erdogan sacked the governor of the central bank.
The firing of Murat Cetinkaya last weekend for failing to follow government instructions “risks damaging already weak domestic confidence,” Fitch said in a statement. It also could jeopardize foreign investment, which the country needs and create “worsening economic outcomes.”
Erdogan has repeatedly railed against high interest rates and called for them to be lowered to stimulate growth.
He once called high rates the “mother and father of all evil.”
Turkey’s main interest rate is 24 percent after the bank under Cetinkaya made an aggressive rate hike of 625 basis points in September 2018, in reaction to a currency crisis in August.
Last month, Erdogan said the rate was “unacceptable,” promising to find a solution as soon as possible. But Fitch said the firing demonstrates Erdogan will not tolerate the need for a period of lower growth to choke off inflation which has averaged 10.3 percent over the past five years.
“The president has regularly expressed unorthodox views on the relationship between interest rates and inflation, and has indicated the governor was replaced because he did not follow government instruction on interest rates,” Fitch said.
It also “highlights a deterioration in institutional independence and economic policy coherence and credibility.”
The country also continues to run the risk of US economic sanctions triggered by delivery of Russian missile components, the agency said, which could provide another hit to confidence in the economy.


Huawei given 90 days to buy from US suppliers

Trader Tommy Kalikas works on the floor of the New York Stock Exchange, Monday, Aug. 19, 2019. (AP)
Updated 20 August 2019

Huawei given 90 days to buy from US suppliers

  • Shortly after blacklisting the company in May, the Commerce Department initially allowed Huawei to purchase some American-made goods in a move aimed at minimizing disruption for its customers

WASHINGTON: US Commerce Secretary Wilbur Ross said Monday the US government will extend a reprieve given to Huawei Technologies that permits the Chinese firm to buy supplies from US companies so that it can service existing customers, even as nearly 50 of its units were being added to a US economic blacklist.
The “temporary general license,” due to expire on Monday, will be extended for Huawei for 90 days, he told Fox Business Network Monday, confirming an expected decision first reported Friday by Reuters. He also said he was adding 46 Huawei affiliates to the Entity List, raising the total number to more than 100 Huawei entities that are covered by the restrictions.
Ross said the extension was to aid US customers, many of which operate networks in rural America.
“We’re giving them a little more time to wean themselves off,” Ross said.
Shortly after blacklisting the company in May, the Commerce Department initially allowed Huawei to purchase some American-made goods in a move aimed at minimizing disruption for its customers.
The extension, through Nov. 19, renews an agreement continuing the Chinese company’s ability to maintain existing telecommunications networks and provide software updates to Huawei handsets.
Asked what will happen in November to US companies, Ross said: “Everybody has had plenty of notice of it, there have been plenty of discussions with the president.”
When the Commerce Department blocked Huawei from buying US goods earlier this year, it was seen as a major escalation in the Sino-US trade war.
The US government blacklisted Huawei, alleging the Chinese company is involved in activities contrary to national security or foreign policy interests.

BACKGROUND

The US blacklisted Huawei, alleging the Chinese company was involved in activities contrary to national security or foreign policy interests.

As an example, the blacklisting order cited a pending federal criminal case concerning allegations Huawei violated US sanctions against Iran. Huawei has pleaded not guilty in the case.

The order noted that the indictment also accused Huawei of “deceptive and obstructive acts.”
At the same time the US says Huawei’s smartphones and network equipment could be used by China to spy on Americans, allegations the company has repeatedly denied.
Huawei, the world’s largest telecommunications equipment maker, is still prohibited from buying American parts and components to manufacture new products without additional special licenses.
Many Huawei suppliers have requested the special licenses to sell to the firm. Ross told reporters late last month he had received more than 50 applications, and that he expected to receive more. He said on Monday that there were no “specific licenses being granted for anything.”