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Dollar rises to 13-month peak on anxiety over Turkey

15 Août 2018

On Tuesday Turkey announced a boycott on U.S. electronics in response.

"For months, the Trump administration has been disputing with Turkey over a "...currency crisis sparked by concerns over President Recep Tayyip Erdogan's economic policies and a trade and diplomatic dispute with the United States", reports CBS News.

"And we have our own telephone brands", he said in clear-worded remarks.

He said: "If they have the iPhone, there is Samsung elsewhere".

Erdogan says Turkey is the target of an economic war, and has made repeated calls for Turks to sell their dollars and euros to shore up the national currency.

Turkey has raised tariffs on some USA products under the principle of reciprocity "in response to the US administration's deliberate attacks on our economy", Vice President Fuat Oktay wrote on Twitter on Wednesday.

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.

Neither the White House, Turkey's Ministry of Foreign Affairs nor Apple immediately responded to a request for comment.

In the last 24 hours or so, with Erdogan's Treasury and Finance minister - who's also his son-in-law - pledging to defend the Turkish lira, there has been some respite for both the lira and other emerging market currencies.

Andrew Brunson has been at the heart of the ongoing fight after the USA sanctioned two top Turkish officials for his continued detention, and Turkey's vow to retaliate, even as its currency plummets.

The Turkish lira rebounded 6% in Tuesday trading, haven fallen 25% in the past month, weighed down by the spat with the United States and wider concerns about the country's stalling economy. Without U.S. support, Turkey has no chance of securing an International Monetary Fund bailout program.

"It's purely technical and Turkey needs a complete rebalancing of its economic business plan, and very sharp rate hikes and a strong commitment that the central bank will be independent", Credit Agricole's senior emerging markets strategist Guillaume Tresca told Reuters.

"The worst of the broader contagion fears is likely behind us, and we do not expect further knock-on effects from Turkish concerns for the major currencies or for global financial markets more broadly", said Erik Nelson, currency strategist at Wells Fargo Securities in NY. He has asserted his innocence, and US officials have dismissed the charges as baseless.

Erdogan has remained defiant after Trump doubled tariffs on aluminum and steel imports from Turkey to 20% and 50%, respectively.

Following the meeting, U.S. officials have given no indication that the United States has been prepared to give ground in the standoff between the two countries' leaders.

Mr Erdogan has presided over soaring inflation and borrowing levels, but insists the lira's plight is the result of a "campaign" led by foreign powers. Turkey refused to release an American pastor who has been in detention in Turkey for almost two years now.

"We supported him with our lives on 15 July", shopkeeper Arif Simsek said, referring to a failed 2016 military coup.

The lira stabilised against the USA dollar on Tuesday just above the all-time low posted early Monday, but most analysts believe the crisis is not yet over.

Dollar rises to 13-month peak on anxiety over Turkey