'Manic Monday': Turkey's collapse sinks emerging markets

Turkey has plan to ease market concerns, minister says, as lira plunges again

Albayrak's comments came as his father-in-law, President Recep Tayyip Erdogan, said he was in no mood to offer concessions to the United States in one of the worst spats between the two North Atlantic Treaty Organisation allies in years. "We will not give them the time of day".

The sanctions caused market turmoil, which the central bank attempted - but failed - to soothe with a series of market-boosting measures. "If they have iPhone, the other side has Samsung".

"We will say goodbye to those, who sacrifice its strategic partnership and alliance with a country of 81 million people on the altar of its relations with terror organizations", he said.

Turkey's finance minister Berat Albayrak said the central bank would start implementing an economic action plan, including cutting the lira reserve requirement ratio, a cash buffer held by banks. Erdogan has ruled out an interest rate hike, which can slow economic growth, but analysts say one is urgently needed to stabilize the currency.

Turkey's interior ministry said on Monday that it was taking legal action against more than 300 social media accounts that had posted messages that harmed the lira, local media reported.

The dispute centres on Turkey's refusal to release U.S. pastor Andrew Brunson.

Brunson has been detained under house arrest pending his trial.

"There is the World Trade Organization but when we look at these steps taken [against Turkey] does it have anything to do with the principles of World Trade Organization?" The US has refused to extradite Fethullah Gulen, who lives in Pennsylvania.

USA support for Kurdish rebel groups fighting Islamic State (IS) fighters in northern Syria is another major difficulty, given Turkey's battle against a Kurdish insurgency in its own country.

Since Mr Erdogan first began making the call in mid-December of 2016, the lira has been the world's worst currency, losing about half its value against the dollar and euro.

Читайте также: Turkish lira crisis gets worse with fresh 11% plunge

What is happening to the lira?

The Turkish lira has lost around 40 percent of its value against the dollar this year, but the financial crisis reached meltdown on Friday after the U.S. doubled tariffs on steel and aluminium imports.

Experts have blamed the sharp slide in the lira on fears the country is descending into an economic crisis. "Fixing the Turkey crisis, however, also means helping these other markets recover at least some of then recent weakness". Meanwhile, inflation has hit 15%. Erdogan's refusal is one of several factors worrying investors.

President Erdogan addressed ruling party members in Trabzon on Sunday and urged businesses not to pull out foreign currencies from banks.

The tariffs are overwhelming to the Turkish economy by themselves, but the levies come as emerging market currencies have already been under pressure this year.

What are Turkish officials doing about the lira?

While Turkey and Argentina face very different political situations, the currencies of both countries have tumbled to all-time lows against the dollar, partly because rising interest rates in the United States lure investors to take money out of their markets and move it to the US.

In May, the central bank raised interest rates to support the lira in an emergency move, but it did not tighten monetary policy at its last meeting.

"The current interest rate level of 17.7 per cent is clearly insufficient to reverse the drop of the lira", he wrote in a research note.

But Erdogan advised Turks not to worry.

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