President Erdogan: US has dollars, 'we have our God'

Galtero Lara
Agosto 10, 2018

Earlier, it had crashed some 12 per cent through the 6.00 level for the first time in history, trading at one point at more than 6.20 lira per dollar.

The currency has lost more than 30% of its value so far this year.

The talks at the State Department were said to highlight American Pastor Andrew Brunson, who is under house arrest in Turkey during his trial on terrorism-related charges, as well as USA sanctions on Turkish ministers. Washington imposed financial sanctions on two Turkish ministers and warned of additional measures.

A plunge in the Turkish lira rocked global equities and emerging markets on Friday and fears of more turmoil sent investors scurrying for safety in assets like the yen and USA government bonds.

In the meantime, Erdogan is making an effusive call to savers to covert FX to Liras, adding that there is no rush to call for a rate hike.

He warned a "rate hike alone might not stem the worries about the U.S. and Turkey tensions and a potential further escalation".

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Erdogan, a self-described "enemy of interest rates", wants cheap credit from banks to fuel growth, but investors fear the economy is overheating and could be set for a hard landing. Erdogan said China, Mexico, Russia and India will be new markets for his country's exports.

The Financial Times added to concerns with a report that the European Central Bank was anxious about possible losses at eurozone banks operating in Turkey.

"Investors have been looking at the unfolding currency crisis in Turkey as a local difficulty, however the accelerating speed of the declines appears to be raising concerns about European banks exposure to the Turkish banking system", said Michael Hewson, chief market analyst at CMC Markets UK.

Shares in France's BNP Paribas, Italy's UniCredit and Spain's BBVA, the banks seen as most exposed to Turkey, fell over 4 percent.

"Don't heed them. Don't forget, if they have their dollars, we have our people, our God".

But that was of course before the lira plunged by more than 10% on the day against the greenback.

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