New Plan to Rescue Turkey's Deteriorating Economy

New Plan to Rescue Turkey's Deteriorating Economy

A vendor offers Turkish flags for sale at a market in Istanbul, Monday, Aug. 13, 2018.

Turkish Presidency Communications Director Fahrettin Altun tweeted that President Recep Tayyip Erdogan said early the same day in Trabzon it was responsibility of both the state and industrialists and merchants to keep the nation on its feet, otherwise they would have to implement plan B or plan C.

The lira recovered to 6.61 following the Central Bank's announcement.

The uncertainty pushed down world stock markets and briefly caused a sharp drop in the currencies of other emerging economies, like South Africa and India, amid concerns that the financial trouble could spread. "The President's remarks reflected his administration's determination to maintain the strength of Turkey's economy and served as a warning against the potential outflow of foreign currencies", Altun said.

"We will be taking the necessary steps with our banks and banking watchdog in a speedy manner", he said.

He has threatened to seek new alliances - a veiled hint at closer ties with Russian Federation - and warned of drastic measures if businesses withdraw foreign currency from banks.

Erdogan rejected speculation that Turkey would seek a rescue package from the International Monetary Found.

"If there are euros, take these out ... immediately give these to the banks and convert to Turkish lira and, by doing this, we fight this war of independence and the future". He has used his new power to put pressure on the central bank to not raise rates.

Losses in the lira were pared in early European trading after Turkey's central bank announced a list of measures, which it says will support financial stability and proper functioning of markets. There are also fears of a bust in the construction sector after years of hectic growth, leaving the banks with mounting debts.

Human rights group demands German, EU intervention in Canada-Saudi row
Analysts believe Saudi Arabia holds somewhere between $10 billion and $25 billion in Canadian currency. Two-way trade between the two countries is tiny - around 0.4 percent of Canada's total trade in 2017.

The central bank will also, if necessary, hold more than one so-called "repo auction", usually a one-off daily event where banks buy and sell short-term government-backed securities - a crucial instrument for short-term liquidity - in the market.

The contagion is also spreading via mechanisms other than the currency markets. As interest rates rise in the US, investors pull their money out of countries that had enjoyed strong economic growth but are perceived as somewhat riskier.

With their mammoth depth and reach, global currency markets reflect big shifts to new economic and political realities.

Among the most important things investors are watching out for is whether Turkey, in an effort to stymie the outflow of capital from the country, puts limits on money flows.

The extended rout in the lira also weighed on the euro and the Australian dollar, while spurring haven demand. "They threatened to sanction our ministers if we didn't", he said.

Last week, a Turkish delegation went to Washington and met American counterparts but there was no breakthrough.

It said all legal action will be taken against all written news, visual news as well as social media accounts which it deemed served the objective of attack.

The ministry said 346 social media accounts that posted comments about the weakening of the currency have been identified since August 7 and legal action has been launched.

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