The Turkish lira has nosedived over the past week and tumbled another 7 percent on Monday as the central bank’s measures failed to restore investor confidence.
Banks are at risk from a sell-off related to Turkey as well, he added, recalling what happened in markets at the time of the Greek crisis in the early part of the decade.
Think your friends would be interested?
The lira plunged to a fresh record low of 7.24 against the dollar during in Asia Pacific trade, where markets were opening for Monday morning.
The rand’s depreciation, which took it to around 15.30 against the dollar, reflected weakness in the Turkish lira in the wake of sanctions imposed by the United States, which also affected other emerging market currencies such as Argentina’s peso.
Tensions have been mounting between the two North Atlantic Treaty Organisation allies over Ankara’s detention of several Americans and other diplomatic issues. He specifically pointed to the lira being under pressure from US President Donald Trump.
Erdogan’s comments on interest rates, along with his recent appointment of his son in law, Albayrak, as finance minister have intensified concerns the central bank is not independent.
The central bank will also, if necessary, hold more than one so-called “repo auction”, usually a one-off daily event where banks buy and sell short-term government-backed securities – a crucial instrument for short-term liquidity – in the market.
“This could be the most expensive pastor in world history”, Sekulow said, referring to the harm being done to Turkey’s economy.
“It’s like dumping gasoline on a fire”, Win Thin, a strategist at Brown Brothers Harriman in NY, told Bloomberg on Sunday.
“Asia should not see any contagion effect fundamentally due to the ongoing crisis in Turkey as the region does not have a meaningful exposure to the country”, analysts at Singapore’s DBS said in a note.
“Policy making is too top-heavy and run by Erdogan, and he simply has no idea how markets work”, he said.
Meanwhile, Turkey’s Financial Crime Investigation Board (MASAK) also launched a probe into what it described as “fake news” aiming to manipulate economy.
The Central Bank of the Republic of Turkey (TCMB) has outlined a range of measures to bolster liquidity and support the financial system.
In a separate statement, Turkey’s Interior Ministry said that “a judicial investigation has been launched into 346 social media accounts who shared posts to provoke the rise in the dollar exchange rate”. With that kind of power vacuum, everyone simply defers to the leader. “I think we’re heading for a crisis even worse than the previous one”, Bas said.
Turkey’s President Recep Tayyip Erdogan on Saturday accused the United States of exchanging its “strategic North Atlantic Treaty Organisation ally with a pastor”, remarks that questioned why Washington was seeking to free its citizens detained by Ankara, including Pastor Andrew Brunson who has become the eye of a diplomatic storm between the two nations.