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You can find the current article at its original source at https://www.theguardian.com/business/live/2018/aug/15/turkish-lira-crisis-turkey-raises-tariffs-on-us-goods-business-erdogan-markets-live
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| Turkish lira crisis: Turkey raises tariffs on US goods – business live | Turkish lira crisis: Turkey raises tariffs on US goods – business live |
| (35 minutes later) | |
| A court in Istanbul has decided to release the Honorary Chair of Amnesty International Turkey, Taner Kilic, after more than fourteen months behind bars. | |
| Kilic had been detained in June 2017 and charged with membership of a terrorist organisation, which he denies. | |
| It’s interesting that he’s being released now -- at a time when Turkey is looking for help and support from other nations. Yesterday, two Greek soldiers who were arrested in March for entering Turkey illegally were released. | |
| However, there’s no legal progress on the case of American pastor Andrew Brunson, despite US pressure.... | |
| Turkish court rules to release local @amnesty chair #TanerKilic who was jailed for over a year on terror charges. Earlier, another court had released two Greek soldiers charged of espionage. Interesting coincidence of timing when still no word on release of US pastor Brunson | |
| Kumi Naidoo, Amnesty International’s new Secretary General, says the organisation is “overjoyed” at the news, and will keep pushing for more detainees to be released. | |
| Naidoo explains: | |
| Beneath the smiles of joy and relief there will be sorrow, anger and a steely determination. | |
| Sorrow for all the things Taner has missed during his cruel incarceration. Anger that the baseless charges against him and the Istanbul 10 have not been dropped. And determination to continue our fight for human rights in Turkey and for the release of all those human rights defenders, journalists and others who have been unjustly jailed in the vicious crackdown. | |
| “We are overjoyed at this news. It has taken us more than a year of campaigning and struggle to get here, but it appears that Taner will finally be freed. Whilst we rejoice at this decision, our celebrations will only truly begin when he is safely back at home in the arms of his wife and daughters. | |
| Artjom Hatsaturjants, research analyst at Accendo Markets, says investors are nervous over the “geopolitical back-and-forth between US and Turkey”. | Artjom Hatsaturjants, research analyst at Accendo Markets, says investors are nervous over the “geopolitical back-and-forth between US and Turkey”. |
| Neither side appears ready to back down over recent confrontation that sent the Turkish lira to new lows and raised a spectre of FX contagion across Europe. | Neither side appears ready to back down over recent confrontation that sent the Turkish lira to new lows and raised a spectre of FX contagion across Europe. |
| The turmoil in Turkey is testing stock market morale and sending the US dollar to its highest level since mid-2017, say Dean Popplewell of foreign exchange firm OANDA. | The turmoil in Turkey is testing stock market morale and sending the US dollar to its highest level since mid-2017, say Dean Popplewell of foreign exchange firm OANDA. |
| U.S Treasuries prices have climbed a tad, while the greenback trades atop its 15-month highs against G20 currency pairs, again putting commodity prices under pressure. | U.S Treasuries prices have climbed a tad, while the greenback trades atop its 15-month highs against G20 currency pairs, again putting commodity prices under pressure. |
| In Turkey, President Erdogan implemented an additional tax on a range of U.S imports (autos, tobacco and alcohol), signalling its squabble with the U.S. will continue. | In Turkey, President Erdogan implemented an additional tax on a range of U.S imports (autos, tobacco and alcohol), signalling its squabble with the U.S. will continue. |
| Crumbs. Foreign exchange firm International Currency Exchange (ICE) says it ran out of Turkish lira on Tuesday, after a surge in demand. | Crumbs. Foreign exchange firm International Currency Exchange (ICE) says it ran out of Turkish lira on Tuesday, after a surge in demand. |
| ICE says that orders for Turkish Lira to its UK website www.iceplc.com jumped by 24,000% compared to the average last month. | ICE says that orders for Turkish Lira to its UK website www.iceplc.com jumped by 24,000% compared to the average last month. |
| Most of its UK stores have sold out of lira, but you can still get your hands on them at London Luton Airport and Doncaster Airport. | Most of its UK stores have sold out of lira, but you can still get your hands on them at London Luton Airport and Doncaster Airport. |
| This surge in demand indicates that many British tourists have decided to take a last-minute holiday to Turkey, which are much cheaper thanks to the currency crisis. | This surge in demand indicates that many British tourists have decided to take a last-minute holiday to Turkey, which are much cheaper thanks to the currency crisis. |
| One pound is currently worth 7.7 lira on the international currency exchanges, up from 6 lira at the start of July. | One pound is currently worth 7.7 lira on the international currency exchanges, up from 6 lira at the start of July. |
| Louis Bridger, general manager at ICE, says there has been “unprecented demand” for the lira. | Louis Bridger, general manager at ICE, says there has been “unprecented demand” for the lira. |
| We are working closely with our suppliers and the Turkish Central Bank to increase our stock however the demand is so high that it’s unlikely we will be able to sell Turkish Lira online until tomorrow morning. We apologise if any customers are experiencing delays when purchasing their currency. | We are working closely with our suppliers and the Turkish Central Bank to increase our stock however the demand is so high that it’s unlikely we will be able to sell Turkish Lira online until tomorrow morning. We apologise if any customers are experiencing delays when purchasing their currency. |
| For people travelling to Turkey who are unable to get their hands on Lira, they can take alternative major currencies such as US dollars and Euros which are easily exchangeable when they are out there.” | For people travelling to Turkey who are unable to get their hands on Lira, they can take alternative major currencies such as US dollars and Euros which are easily exchangeable when they are out there.” |
| European stock markets have all fallen into the red, as nervous traders pile into the US dollar. | European stock markets have all fallen into the red, as nervous traders pile into the US dollar. |
| In London, the FTSE 100 has slid by 75 points, or 1%, with hefty losses on other markets too | In London, the FTSE 100 has slid by 75 points, or 1%, with hefty losses on other markets too |
| Mining shares are leading the selloff in London, with Anglo American shedding 4.5%. | Mining shares are leading the selloff in London, with Anglo American shedding 4.5%. |
| They’re suffering from falling commodity prices, with copper and zinc on the slide. That’s partly because the US dollar is rallying, hitting a 14-month high this morning. | They’re suffering from falling commodity prices, with copper and zinc on the slide. That’s partly because the US dollar is rallying, hitting a 14-month high this morning. |
| Ken Odeluga, market analyst at City Index, blames anxiety over the Turkish financial crisis: | Ken Odeluga, market analyst at City Index, blames anxiety over the Turkish financial crisis: |
| Turkey is nowhere near fixed, so risk appetite is struggling to make a comeback. | Turkey is nowhere near fixed, so risk appetite is struggling to make a comeback. |
| European stock markets have steadily slipped into the red since the open, also leading a retreat by Wall Street futures. | European stock markets have steadily slipped into the red since the open, also leading a retreat by Wall Street futures. |
| Prospects of a smooth and sustained recovery for emerging market currencies had looked too dicey to Asia-Pacific investors, so markets there mostly fell as well. Turkey’s lira lost all Wednesday gains at one point, following Tuesday’s bounce of more than 8%. It is now firmer again, though clearly volatile. It’s uncertain whether the rebound will be sustained. | Prospects of a smooth and sustained recovery for emerging market currencies had looked too dicey to Asia-Pacific investors, so markets there mostly fell as well. Turkey’s lira lost all Wednesday gains at one point, following Tuesday’s bounce of more than 8%. It is now firmer again, though clearly volatile. It’s uncertain whether the rebound will be sustained. |
| Comebacks by other currencies that fell sharply in recent days, like the rand, Russia’s rouble and Mexico’s peso, also falter. | Comebacks by other currencies that fell sharply in recent days, like the rand, Russia’s rouble and Mexico’s peso, also falter. |
| Turkish trade minister Ruhsar Pekcan says the new tariffs will “protect the rights of Turkish companies”, as well as retaliating against America’s tariffs on steel and aluminium | Turkish trade minister Ruhsar Pekcan says the new tariffs will “protect the rights of Turkish companies”, as well as retaliating against America’s tariffs on steel and aluminium |
| Pekcan also insisted Turkey isn’t dependent on the US, saying: | Pekcan also insisted Turkey isn’t dependent on the US, saying: |
| The United States is an important trading partner, but it is not our only partner. We have other partners and alternative markets.” | The United States is an important trading partner, but it is not our only partner. We have other partners and alternative markets.” |
| (via Turkey’s Anadolu news agency) | (via Turkey’s Anadolu news agency) |
| Hiking tariffs won’t help Turkey tackle its key financial challenge -- to keep servicing its foreign loans. | Hiking tariffs won’t help Turkey tackle its key financial challenge -- to keep servicing its foreign loans. |
| Turkish companies owe almost $300bn in foreign denominated debt. That includes a surge in borrowing by Turkish banks, who have tapped foreign wholesale markets to help fund its credit boom. | Turkish companies owe almost $300bn in foreign denominated debt. That includes a surge in borrowing by Turkish banks, who have tapped foreign wholesale markets to help fund its credit boom. |
| The slide in the lira in recent weeks has pushed up the cost of refinancing those loans (finding a new lender when an existing debt matures). | The slide in the lira in recent weeks has pushed up the cost of refinancing those loans (finding a new lender when an existing debt matures). |
| Jurgen Odenius, Economic Counsellor at PGIM Fixed Income, explains: | Jurgen Odenius, Economic Counsellor at PGIM Fixed Income, explains: |
| The root cause of the crisis lies in a leverage-financed domestic demand boom that increased the external financing requirement of Turkey’s corporations, banks, and government to an estimated $229 billion this year. Most of these liabilities fall on the private sector, mainly banks and corporations; the sovereign owes only $11 billion. What makes the problem worse is that the external financing requirement is trending up over the medium term, indicative of a long-standing over-reliance on foreign-funded leverage. | The root cause of the crisis lies in a leverage-financed domestic demand boom that increased the external financing requirement of Turkey’s corporations, banks, and government to an estimated $229 billion this year. Most of these liabilities fall on the private sector, mainly banks and corporations; the sovereign owes only $11 billion. What makes the problem worse is that the external financing requirement is trending up over the medium term, indicative of a long-standing over-reliance on foreign-funded leverage. |
| As the lira collapses, this lending boom now is undoubtedly grinding to a sudden halt. Foreign financiers, whether they exist as banks or bond investors, are re-assessing the outlook and related repayment prospects. Western European banks from Spain and France are particularly exposed, with over half of the debt owed to them. The trouble is that the Turkish financial system and the corporate sector are short dollars. | As the lira collapses, this lending boom now is undoubtedly grinding to a sudden halt. Foreign financiers, whether they exist as banks or bond investors, are re-assessing the outlook and related repayment prospects. Western European banks from Spain and France are particularly exposed, with over half of the debt owed to them. The trouble is that the Turkish financial system and the corporate sector are short dollars. |
| GAM’s Paul McNamara says the issue is crucial: | GAM’s Paul McNamara says the issue is crucial: |
| Top 3 finance issues facing Turkey:* roll over foreign loans to banks* roll over foreign loans to banks* roll over foreign loans to banksThe rest is noise. | Top 3 finance issues facing Turkey:* roll over foreign loans to banks* roll over foreign loans to banks* roll over foreign loans to banksThe rest is noise. |
| Turkey’s new swathe of tariffs are going to have a major impact on the cost of US goods. | Turkey’s new swathe of tariffs are going to have a major impact on the cost of US goods. |
| The list, published on the country’s Official Gazette, shows that the levies on some products will more than double. | The list, published on the country’s Official Gazette, shows that the levies on some products will more than double. |
| For example: | For example: |
| Rice: Tariff more than doubled to 50%, up from 20% | Rice: Tariff more than doubled to 50%, up from 20% |
| Spirits: Tariff more than tripled to 140%, up from 40% | Spirits: Tariff more than tripled to 140%, up from 40% |
| Coal: Tariff raised to 14%,from 10% | Coal: Tariff raised to 14%,from 10% |
| Beauty and make-up products: Tariff doubled to 60%, from 30% | Beauty and make-up products: Tariff doubled to 60%, from 30% |
| Certain types of paper: Tariff doubled to 50%, from 25% | Certain types of paper: Tariff doubled to 50%, from 25% |
| Motor cars: Tariff more than tripled to 120%, from 35% | Motor cars: Tariff more than tripled to 120%, from 35% |
| TABLE: Turkey is targeting same U.S. products as in the initial retaliation (effective June 21), but significantly raising the tariffs ⬇️Initial: https://t.co/oDr3qOMRCPNow: https://t.co/ajmGyrhUZe pic.twitter.com/C3zffLaOHh | TABLE: Turkey is targeting same U.S. products as in the initial retaliation (effective June 21), but significantly raising the tariffs ⬇️Initial: https://t.co/oDr3qOMRCPNow: https://t.co/ajmGyrhUZe pic.twitter.com/C3zffLaOHh |
| Back in Turkey, the government is preparing for show of support from Qatar. | Back in Turkey, the government is preparing for show of support from Qatar. |
| The emir of Qatar, Sheikh Tamim bin Hamad al-Thani, left Doha to travel to Ankara for a “working visit” with president Erdoğan. | The emir of Qatar, Sheikh Tamim bin Hamad al-Thani, left Doha to travel to Ankara for a “working visit” with president Erdoğan. |
| The Gulf Times says they will discuss bilateral relations between Qatar and Turkey. | The Gulf Times says they will discuss bilateral relations between Qatar and Turkey. |
| They will also examine: | They will also examine: |
| “means of strengthening the existing strategic cooperation between the two countries in various fields, in addition to a number of issues of mutual interest. | “means of strengthening the existing strategic cooperation between the two countries in various fields, in addition to a number of issues of mutual interest. |
| Turkey and Qatar are close allies. There is a Turkish military base in the Gulf state, and Turkey was quick to send food aid to Qatar when Saudi Arabia imposed a blockade last year. | Turkey and Qatar are close allies. There is a Turkish military base in the Gulf state, and Turkey was quick to send food aid to Qatar when Saudi Arabia imposed a blockade last year. |
| However, the wealthy Gulf state might be reluctant to anger America by providing Ankara with financial aid at this time. | However, the wealthy Gulf state might be reluctant to anger America by providing Ankara with financial aid at this time. |