US crippling Turkey’s economy, says Erdogan

US crippling Turkey’s economy, says Erdogan

Turkey is battling double-digit inflation, which surged to almost 18 percent in August, and a meltdown in the lira which hit a record low of 7.24 against the USA dollar a month ago.

Turkish lira banknotes are seen in this picture illustration in Istanbul, Turkey August 14, 2018.

The increase, which was higher than expected, boosted the lira by five percent against the dollar and may ease investor concern about Erdogan's influence on monetary policy.

European Central Bank President Mario Draghi said the strength of the European economy continues to support confidence but added that inflation is likely to hover at current levels.

The day's other central bank meetings were far less eventful.

Those rises followed gains on Wall Street Thursday, with the Dow Jones Industrial Average ending 0.57 percent higher, the S&P 500 gaining 0.53 percent and the Nasdaq Composite adding 0.75 percent.

"Just a rate hike is not enough", said Charles Robertson, Renaissance Capital's global chief economist and head of macro-strategy, saying that Turkey needed to publish stress test parameters of banks and details of fiscal tightening, as well as secure external funding.

"It was a great decision", Ash said. "They'll safe out of this with out the International Monetary Fund and with out resort to capital controls".

Recep Tayyip Erdogan, who defines himself as an "enemy of the interest", wishes to keep the interest rates low in order to keep the boom of economic growth fueled by lending. About half of the Turkish banking system's deposits are in foreign currencies.

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While a sure starting up, the forex faces a slew of challenges ahead, consultants agree.

Erdogan has always been pressuring the central bank to keep interest rates low to encourage economic growth, even though that growth has encouraged reckless borrowing and caused consumer prices to spike higher. Inflation at that time stood at 15.Four percent, already more than three times the bank's goal of 5 percent.

Turkish lira implied volatility gauges fell to their lowest in more than a month, as sentiment continued to improve.

The US hit two Turkish ministers with sanctions over the detention of an American pastor and President Donald Trump doubled steel and aluminium tariffs on Turkey. In August of a year ago, one dollar bought Three.5 lira; at some level of the last month it fetched more than 6.

Neil Wilson, chief market analyst at Markets.com said: "This was a definite statement from policymakers, but the risk now is that the market tries to test the central bank's resolve: the horse may have already bolted". Frequent financial conception holds the other, that elevated charges are outmoded to curb inflation.

Erdogan has no longer helped his case by doubling down on his intransigence some other time the US, analysts remark.

Erdogan was referring to a recent surge in USD/TRY rate which he has said was as an economic attack by the Trump administration under a pretext of an ongoing legal case involving a USA citizen with strong suspected links to terrorist activities targeting Turkey's peace and stability.

The pan-European STOXX 600 index gained 0.28 percent.

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