ibusinesslines.com September 21, 2018

Turkish lira eases after hefty central bank rate hike

16 September 2018, 12:35 | Kelvin Horton

Turkey's Autocratic President Has Named a New Chair of Its Sovereign Wealth Fund: Himself

Erdogan appoints himself chairman of Turkey’s sovereign wealth fund

On the basis of the new regulations, existing contracts now in foreign currencies will have to be converted to the lira within 30 days.

Rental and sale agreements are often conducted in foreign currencies in the retail sector and also to foreigners living in Turkey, AFP reported.

The weighted cost of funding as of Tuesday was 19.25 per cent and the median forecast in a Bloomberg survey is for a 325-basis-point hike in the one-week repo rate to 21 per cent on Thursday.

The dual developments on Thursday pushed the lira as high as 6.08 against the dollar and it traded flat on Friday morning, standing at 6.03 to the dollar at 07:28 GMT.

The lira fell 3.5 percent against the dollar on his words, before rising 6 percent after the rate hike decision.

It took a 3 percent dive again as Erdogan called for a rate cut rather than a hike and blamed the central bank for the spike in inflation which is now nearly 20 percent.

Speculation has been growing that the monetary authority will deliver a sizeable interest-rate increase Thursday after it signalled potential action last week to help stem accelerating inflation. "I'm saying let's cut these high interest rates".

Erdogan has called for low rates since, claiming high interest rates were "evil", referring to them as "tools of exploitation".

"My sensitivities concerning interest rates are the same, nothing has changed", he said.

Who is responsible for Turkey's lira crisis?

The lira has lost around 40 percent of its value this year amid growing worldwide concern over the health of the Turkish economy and a damaging diplomatic dispute with the US.

Turkey's currency and inflationary troubles are also compounded by the threat of steel and aluminium tariffs from the United States as well as sanctions over the detention of an American evangelical pastor. It has still lost 38 percent of its value against the USA currency this year. GDP growth, however, decelerated to an annual rate of 5.2 percent in the second quarter from 7.4 percent in the first despite low interest rates.

Erdogan has cast the lira crisis as an "economic war" targeting Turkey and has repeatedly urged Turks to sell their dollar savings to shore up the lira.

Aberdeen Standard Investments Head of Emerging Market Debt, Brett Diment, said: "It is pleasing to see common sense prevail".

Bank of England Governor Mark Carney told ministers Britain's property market could crash and mortgage rates spiral up if there was a chaotic no-deal Brexit, the Times newspaper reported.

Both actions came after Erdogan named himself the head of the country's nascent sovereign wealth fund on September 11, giving himself even more control over the country's slowing economy.

President Tayyip Erdogan of Turkey on Friday again blamed the U.

The fund was set up in the aftermath of the attempted overthrow of Erdogan in July 2016.

Erdogan has also announced plans for a 45-kilometre (28 mile) canal that would turn the western side of Istanbul into an island and is estimated to cost around $16 billion.

Other News

Trending Now

Hurricane Florence Hits Near Wrightsville Beach
In Wilmington, near where the eye of the hurricane touched down, trees and power lines were down and many windows had been broken. That deluge will lead to " catastrophic flash flooding and prolonged, significant river flooding", according to the NHC.

Verizon iPhone Xs Deal Teased as Best Offer Ever
This week Apple announced the latest incarnations of its iPhone: the iPhone XS , the iPhone XS Max , and the iPhone XR . For instance - AT&T will lease you the iPhone XS for less than $34 each month for tenure of 30 months.

Space Station astronaut captures mammoth Hurricane Florence from directly above
Outer bands of wind and rain from Hurricane Florence have begun lashing North Carolina as the monster storm moves nearer to the coast.

Trump calls North Carolina officials, offers help for Florence
Parts of the Carolinas could see 50 cm to 76 cm, with isolated areas getting 101 cm, over seven days along the coast. Gradual weakening is expected throughout the day Friday, with significant weakening predicted over the weekend.

Isaac now a tropical depression, will dump rain on Ja this weekend
Tropical Storm Helene , Hurricane Joyce , Florence and Mangkhut pose a threat to life from one stretch of the globe to the other. As soon as Deal made the declaration, Coweta County Emergency Management Agency director Jay Jones said he sprang into action.

Apple A12 iPhone XS AnTuTu benchmark score is mind-blowing, crosses 360K!
Starting 2019, iPhone users will have to shell out more money - ranging from $49 to $69 - to have their batteries replaced. The iPhone XS and XS Max will be available to preorder starting Friday before going on sale a week later, on September 21.

Sen. Jeff Merkley slams Trump administration over FEMA funding
Additionally, Hurricane Harvey struck Texas in August and Hurricane Irma struck Florida in September, leaving FEMA stretched thin. He claimed that the money moved to ICE was "to build more prison camps" for undocumented immigration at the U.S. -Mexico border.