Turkey has solid, strong economic dynamics, President Erdoğan says

Eurozone countries run a trade surplus with Turkey but it is small and in the two previous Turkish financial crises since the turn of the millennium, European exporters have been able to divert their business to other markets.

His comments followed US President Donald Trump’s announcement that he would be imposing a 20 per cent duty on aluminum and 50 per cent one on steel imported from Turkey.

“There is a panic move on all emerging market currencies, the stress spreads on the South African rand, the Indian rupee or the Mexican peso”, said analyst Alexandre Baradez from brokerage IG Group.

Asian markets fell sharply overnight.

Investors are anxious that Turkish companies could struggle to repay loans in dollars and euros – a debt pile that only grows as the lira falls.

The Turkish central bank announced Monday morning for its part a list of measures in which banks will be provided all the liquidity they need in light of the currency plunge, “to support the effective functioning of financial markets”.

Stocks were on a five-week winning streak before last week.

Turkey’s central bank announced a series of measures on Monday to free up cash for banks as the country grapples with a currency crisis sparked by concerns over President Recep Tayyip Erdogan’s economic policies and a trade and diplomatic dispute with the United States.

Former deputy prime minister Mehmet Simsek, a reassuring figure for investors, was conspicuously absent from the new government which is a vertical power structure under Erdogan.

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

“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.

The Organization of the Petroleum Exporting Countries forecast lower demand for its crude next year as rivals pump more and said top oil exporter Saudi Arabia, eager to avoid a return of oversupply, had cut production. The U.S. dollar climbed and the yen jumped.

“The US is a relative beacon of strength with stable to improving economy. Ergodan’s unwillingness to raise interest rates suggests that the situation might not be defused soon”, said Konstantinos Anthis, head of research at ADSS.

The S&P-ASX 200 index dropped 26.2 point, or 0.42 per cent, to 6252.2 but volume was below average and domestic losses less than half those in Tokyo and Hong Kong as investors downplayed global contagion risks.

In Toronto, the S&P/TSX composite index lost 0.46 per cent, or 75.76 points, to 16,250.75. Major exporters including technology, basic materials and industrial companies sank.

He said the fall in the lira was caused by a plot and did not reflect the country’s economic state. US gold futures fell 1.52 percent to $1,200.50 an ounce.

Stocks were on a five-week winning streak before last week, and strong corporate earnings reports were a big factor.

Other exposures amounted to another USD78bn, most of which were in the form of guarantees.

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.

Trading in Germany, Bayer tumbled 10.3 per cent. And Trump then hurled fuel on the flames with his tweet over the tariffs, prompting Friday’s crash.