President Trump and Erdogan were on relatively good terms before this latest spat, as the American president has even congratulated the Turkish authoritarian for consolidating power.
The president’s comments came after diplomats from both sides met Monday to calm tensions. He suggested Turks would buy local or Korean phones instead of US-made iPhones, though it was unclear how he meant to enforce the boycott.
The current crisis was sparked by Ankara’s refusal to release pastor Andrew Brunson, who is now under house detention on terror-related charges and espionage.
It was unclear whether Erdogan’s call for Turks to sell dollars would be widely heeded, but a Turkish news agency said traders in Istanbul’s historic Eminonu district converted $100,000 into lira on Tuesday.
“We (also) have our Venus and Vestel”, he said about homegrown Turkish electronics brands. Concerns that European banks would be hit by financial turmoil in Turkey had weighed on the single currency. The lira is, however, down about 40 per cent for the year against the United States dollar and had been down 25 per cent in a week before a slight recovery on Tuesday.
Oil and metal futures fell sharply and the dollar faded after hitting a 13-month high earlier in the day.
Global investors are anxious about Turkey’s high amount of debt held in foreign currencies, especially the dollar. That’s because investors have lost confidence in management of the economy under Erdogan, who believes in unorthodox economic policy, demands low interest rates and constantly assails “the interest rate lobby”. Investors are also anxious about the effects of the dispute between two North Atlantic Treaty Organisation allies.
Nevertheless, Goh believes that the Turkish lira crisis is unlikely to cause contagion to the rest of the world, pointing out that it is very much an isolated incident.
Krishnan saw the lira bounce as fragile, noting Turkey needed “concrete policy action to improve fundamentals and also some improvement in relations with the United States”. Amid calls to “burn” the dollars, the group headed to a bank branch where they converted the money, it said. Fear of full-blown crisis and debt defaults in the country of 80 million people is far from over as the central bank’s failure to tackle galloping inflation and Ankara’s diplomatic tiff with Washington keep investors wary.
“So now you have economic data warranting the Fed rate hiking cycle and expectations for other central banks pushed out a little bit”, said Tomes.
A Turkish court on Wednesday rejected an appeal from American pastor Andrew Brunson to be released from house arrest, but a higher court has yet to rule on the matter. The 50-year-old pastor is charged with terrorism links and spying. Brunson, who faces up to 35 years in jail if found guilty, denies the charges.
United Kingdom tourists heading to the likes of Marmaris and Antalya can buy a beer for just £1.37 – the same as the cost in Britain in 1990 – and also snap up a meal for a family of four with drinks for just £35 – down 50 per cent on past year. Susan Shand adapted it for Learning English.
This story was reported the Associated Press and by VOA’s Chris Hanna. Mario Ritter was the editor.