Taiwanese firms in Turkey face risk as local currency crashes

Taiwanese firms in Turkey face risk as local currency crashes

President Recep Tayyip Erdogan on Monday said the United States was seeking to stab Turkey "in the back" over a diplomatic row sparked by the detention of an American pastor that has sent the lira into a tailspin.

His comments echoed those made by Turkey's President Recep Tayyip Erdogan over the weekend.

The lira has been hammered by worries over President Erdogan's handling of the economy, a refusal to raise interest rates to curb rampant inflation and worsening ties with the US.

The Turkish stock market has also fallen 17%, while government borrowing costs have risen to 18% a year.

Turkey's troubles also dampened USA stock markets, driving losses in all three major indexes by Monday afternoon.

On Tuesday the lira recovered some ground, trading at 6.53 to the dollar at 0918 GMT, up around five percent on the day.

"For the time being Turkey's financial crisis looks localised but the country's central bank has perhaps only days to stop the decline of the currency before the lira's freefall results in loan defaults, starts seriously affecting the country's financial system and potentially starts spilling over onto European banks", she said.

"We (also) have our Venus and Vestel", he said about homegrown Turkish electronics brands.

Unprecedented punitive sanctions declared by the U.S. President Donald Trump's administration on two Turkish ministers over the detention of an American pastor, as well as doubling tariffs on steel and aluminum, have worsened relations between the North Atlantic Treaty Organisation allies to their lowest over decades.

Aidan Yao, senior emerging Asia economist at AXA Investment Managers, said the chance that the Chinese government would extend aid to Turkey was not small, but would be based on political rather than economic calculations given the risks that would be associated with such a move.

Bayern Munich star reject to play for Mourinho's Man United
"I'm a United fan, and I want to see them win the title, but I fear it's going to be very hard for that to happen this season". Boateng also missed a number of games at the beginning of the 2017-18 season due to another hamstring problem.

In his speech, Erdogan, referring to industrialists, said, "Do not prefer to rush to banks and buy foreign currency".

The lira pulled back on Tuesday from a record low hit a day earlier, helped by the central bank's new liquidity measures and news of a planned conference call in which the finance minister will seek to reassure investors. "To suggest this thing is over, you would have to see that Turkey is isolated".

European stocks fell on Monday to extend losses from the previous session as fears over the collapse of the Turkish lira continued to spook markets.

The Turkish lira has been under pressure for months but nosedived as Washington moved to introduce sanctions over the detainment of a United States pastor, Andrew Branson, who Ankara insists maintains ties with the self-exiled cleric Fethullah Gulen.

American pastor Andrew Brunson has been held since October 2016 on charges of terror and espionage, and if convicted, could face a jail term of 35 years.

"When they fail to make us what they want on the field, they don't hesitate to use the economy as a weapon, just like diplomacy, just like military power, just like social and political instability", Erdoğan said. "I believe the new and important topics will be discussed in this call, otherwise there would not be such an attempt".

The ruckus between Turkey and the U.S. has impacted on other countries' currencies, including the Indian rupee, as investors fear the lira's wobbles could spread to developing nations.

The lira tumbled some 16 percent against the dollar on Friday, as US President Donald Trump said he had doubled tariffs on steel and aluminium from Turkey.

Experts said that despite a slight rebound in the lira's value yesterday, following support from Turkey's central bank, further falls could follow, making holidays even cheaper.

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