Turkey rejects "impositions" as standoff with US rattles markets

Turkey rejects

Chancellor Angela Merkel said on Monday an "economically prosperous Turkey" serves Germany's interest.

Erdogan also hit back at United States authorities for convicting Mehmet Hakan Atilla, 47, deputy director general of Turkish lender Halkbank on charges of helping Iran evade U.S. sanctions on billions of dollars of oil proceeds.

"Our institutions will take necessary action from Monday in order to relieve the markets", he said, adding that the plan would centre on "the state of our banks and the small and medium size enterprises" most affected by the lira's plunge.

In other commodity markets, gold was no beneficiary of safe haven flows, in fact it was lower almost 1 per cent at $1198.25 an ounce.

China's blue chip index shed 1.2 per cent, while Hong Kong stocks lost 1.4 per cent as the local dollar fell to the limits of its trading band. Major European markets were down around 0.5%, with shares in banks including Spain's BBVA and Italy's Unicredit sliding more than 4%.

Turkish President Recep Tayyip Erdogan, embroiled in a bitter dispute with the USA, a North Atlantic Treaty Organisation ally, contended Sunday the plunging value of his country's lira currency amounted to a "political plot" against Turkey.

"If we look back at Greece, all the credit spreads blew out and that transmits across to Aussie banks", he said. "If you come at us with your dollars then we will find other ways to do business". "We fail to see how the crisis can be resolved without external support", but an International Monetary Fund support package will be hard "given Turkey's current political situation".

Namely, within the tightening of economic measures, US President Donald Tramp chose to double customs duties on Turkish steel and aluminum, speeding up the fall of the Turkish currency, which lost 16 percent on the dollar on Friday.

The dispute between the two North Atlantic Treaty Organisation allies - which reached new intensity over the detention of an American pastor in Turkey - has hammered the lira and also raised questions over the future partnership between Washington and Ankara.

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'I have just authorized a doubling of Tariffs on Steel and Aluminum with respect to Turkey as their currency, the Turkish Lira, slides rapidly downward against our very strong Dollar!' Trump said in an early morning post on Twitter. President Donald Trump tweeted Friday.

Worsening relations between Turkey and the USA, fuelled by Donald Trump's administration hitting the country with sanctions this month over its refusal to extradite a United States preacher imprisoned in the country.

The lira recovered some of its losses after Berat Albayrak, the country's finance chief - and Mr Erdogan's son-in-law - said the government had readied an "action plan" to ease market concerns.

Albayrak described the Lira's weakness as "an attack", echoing President Erdogan, who is his father-in-law.

Turkey's central bank announced a series of measures on Monday to free up cash for banks as the country grapples with a currency crisis sparked by concerns over President Recep Tayyip Erdogan's economic policies and a trade and diplomatic dispute with the United States. It also said it would slash the amount of funds that banks are required to hold in reserve.

Turkish banks will be allowed to borrow foreign exchange deposits in one-month maturities, in addition to one-week maturities. It was trading at 6.8700 per dollar at 1024 GMT.

Investors are waiting for "a convincing response from the central bank and government", Rob Carnell, an economist at investment bank ING, said in a note to clients Monday.

Meanwhile, Turkey's interior ministry said it will take legal action against hundreds of social media accounts that it says are provoking a drop in the lira.

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