Erdogan vows action against 'economic terrorists' over lira plunge

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"Investors are clearly concerned that Turkey's government won't act (or allow the central bank to act) to shore up the currency, and fears are mounting that this could result in a crisis in Turkey's banking sector", William Jackson, chief emerging markets economist at research firm Capital Economics, wrote in a note to clients Friday.

Turkey's President Recep Tayyip Erdogan is not backing down. It fell as much as 12 per cent at one stage on Monday, then recovered to a loss of 8.5 per cent.

"Turkey does not trigger such a devastating series of crises in other emerging markets that the combined impact could dent growth in the developed world in a meaningful way", said Holger Schmieding, an economist with Berenberg Bank.

"This would be another headwind for EMs as an asset class, but the scope for wider economic spill-overs appears contained".

In terms of the foreign exchange liquidity management, lenders, among other measures, will be able to borrow FX deposits in one-month maturity in addition to one-week maturity as the Central Bank will "closely monitor the market depth and price formations, and take all necessary measures to maintain financial stability", the regulator noted.

Erdoğan reiterated the Turkish government's view that the recent downturn in Turkish lira and stocks was caused by an attack by U.S. President Donald Trump and his administration. "Without Turkish cooperation, US goals in Syria, Iran, Russia, and even Europe become more hard".

In corporate news, German conglomerate Bayer took a dive after a United States jury ruled against its Monsanto unit on Friday and awarded US$289 million to a former school groundskeeper who said that exposure to Monsanto's Roundup weed killer caused cancer.

Turkey's troubles also dampened USA stock markets, driving losses in all three major indexes by Monday afternoon. On Wall Street, futures for the Standard & Poor's 500 index and Dow Jones industrial average were up 0.4 per cent.

In Asian trading, the euro also skidded to a one year low of $1.13, the single currency's lowest level against the USA currency since July 2017.

The Bloomberg Commodity Index declined 0.8 percent. Forecasters have expected economic growth to decline since regulators tightened lending controls previous year to rein in surging debt.

The yield on 10-year Treasuries was unchanged at 2.8732 percent.

In other commodity markets, gold was last down half a percent at $1,204 an ounce. USA gold futures fell 1.59 percent to $1,199.60 an ounce.

Hungary, for example, has seen its currency, the forint, fall by almost 4% against the United States dollar since last Wednesday.

Oil prices fell, with Brent crude off 25 cents at $72.56 a barrel and US crude 21 cents lower at $67.43. Asian markets fell overnight, while European markets were slightly lower.

The JP Morgan report said the hit on the core capital would be "a significant but manageable" 87 basis points for ING and 53 basis points for BBVA.

Investors also backed away from Argentina's stock market.

Turkey is a relatively small oil consumer, accounting for less than 1 million barrels per day (bpd), or around 1 percent of global demand. "Contagion risk is the primary driver today".

It did not provide information on the accounts but said they aimed to "manipulate the dollar rate and form negative perceptions" concerning the Turkish economy.

The US dollar is the strongest it's been in more than a year, which could eventually create problems for US companies that make a lot of sales overseas.