Erdogan says Turkey will boycott U.S.
electronics, lira steadies
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[August 14, 2018]
By Daren Butler and Behiye Selin Taner
ISTANBUL (Reuters) - President Tayyip
Erdogan said on Tuesday Turkey will boycott electronic products from the
United States, retaliating in a dispute with Washington that has helped
drive the lira to record lows.
The lira <TRYTOM=D3> has lost more than 40 percent this year and crashed
to an all-time low of 7.24 to the dollar early on Monday, hit by worries
over Erdogan's calls for lower interest rates and worsening ties with
the United States.
The weakness of the Turkish currency has rippled through global markets.
Its drop of as much as 18 percent on Friday hit U.S. and European stocks
as investors fretted about banks' exposure to Turkey.
On Tuesday the lira recovered some ground, trading at 6.53 to the dollar
at 0918 GMT, up around five percent on the day.
It was supported by news of a planned conference call in which the
finance minister will seek to reassure investors concerned by Erdogan's
control of the economy and his resistance to interest rate hikes to
tackle double-digit inflation .
Erdogan says Turkey is the target of an economic war, and has made
repeated calls for Turks to sell their dollars and euros to shore up the
"Together with our people, we will stand decisively against the dollar,
forex prices, inflation and interest rates. We will protect our economic
independence by being tight-knit together," he told members of his AK
Party in a speech.
"We will impose a boycott on U.S. electronic products. If they have
iPhones, there is Samsung on the other side, and we have our own Vestel
here," he said, referring to the Turkish electronics company, whose
shares rose five percent.
The United States has imposed sanctions on two Turkish ministers over
the trial on terrorism charges of a U.S. evangelical pastor in Turkey,
and last week Washington raised tariffs on Turkish metal exports.
Erdogan said his government would offer further incentives to companies
planning to invest in Turkey and said firms should not be put off by
"If we postpone our investments, if we convert our currency to foreign
exchange because there's danger, then we will have given into the
enemy," he said.
Although the lira enjoyed a small respite on Tuesday, investors say
measures taken by the Central Bank on Monday to ensure liquidity fail to
address the root cause of lira weakness.
"What you want to see is tight monetary policy, a tight fiscal policy
and a recognition that there might be some short-term economic pain --
but without it there's just no credibility of promises to restabilize
things," said Craig Botham, Emerging Markets Economist at Schroders.
Dollar-denominated bonds issued by selected Turkish banks continued to
fall on Tuesday, although sovereign bonds steadied.
[to top of second column]
A money changer counts Turkish lira banknotes at a currency exchange
office in Istanbul, Turkey August 2, 2018. REUTERS/Murad Sezer/File
Relations between NATO allies Turkey and the United States are at a
low point, hurt by a series of issues from diverging interests in
Syria, Ankara's plan to buy Russian defence systems and the
detention of an American pastor, Andrew Brunson.
The White House on Monday said U.S. national security adviser John
Bolton met Turkey's ambassador to the United States to discuss the
detention of Brunson. The pastor's Turkish lawyer launched a fresh
appeal on Tuesday for his release.
Traders said news that Finance Minister Berat Albayrak will hold a
conference call with up to 1,000 investors to discuss the economy
might also have helped support the currency.
"I think the investor call Albayrak has scheduled has helped lira
firm," said TEB Investment strategist Isik Okte. "I believe the new
and important topics will be discussed in this call, otherwise there
would not be such an attempt."
"The concerns are ongoing in the market but it is possible to
mention a limited optimism for the first time in a while," a foreign
exchange trader said.
Turkey's business lobbies called on Tuesday for a tighter monetary
policy to stabilise the lira, and for diplomacy to solve
Following Monday's meeting between Bolton and Turkish ambassador
Serdar Kilic, U.S. officials have given no indication that the
United States has been prepared to give ground in the standoff
between the two countries' leaders.
Ankara has repeatedly said the Brunson case was up to the courts and
a Turkish judge moved Brunson from jail to house arrest in July.
Infuriated by the move, which Washington said was insufficient,
Trump sanctioned two Turkish ministers and doubled tariffs on metal
imports, adding to lira's slide.
White House economic adviser Kevin Hassett said Treasury Secretary
Steve Mnuchin was monitoring the financial situation in Turkey "very
(Additional reporting by Ece Toksabay and Ezgi Erkoyun, Writing by
Humeyra Pamuk and Dominic Evans, Editing by William Maclean)
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