Stocks drop on Monday as Turkey lira crisis continues

MORNING BID EUROPE-Turkey's crisis is starting to spread

MORNING BID EUROPE-Turkey's crisis is starting to spread

Ankara and Washington also disagree over their military interventions in the Syria war, Turkey's plan to buy missile defense systems from Russian Federation as well as the U.S. conviction of a Turkish state bank executive on sanctions-busting charges in January.

One such official is Mathew Palmer, who was expected to begin his new assignment soon as US Deputy Assistant Secretary of State in the Bureau of European Affairs who will be responsible, among other countries, for Turkey. Turkey has so far refused to comply, prompting Trump on Friday to double the tariffs on U.S. imports of Turkish steel and aluminium, causing the lira to plunge. "If you come at us with your dollars then we will find other ways to do business". "Can such a thing be accepted?"

Turkey's President Recep Tayyip Erdogan is not backing down.

In early Asian trading Monday, the lira fell to a record low of 7.06 against the dollar.

The Turkish central bank announced Monday morning for its part a list of measures in which banks will be provided all the liquidity they need in light of the currency plunge, "to support the effective functioning of financial markets".

The Central Bank also lowered Turkish lira reserve requirement ratios by 250 basis points for all maturity brackets, and reserve requirement ratios for non-core FX liabilities by 400 basis points for up to three-year maturities.

Erdogan, who has been increasing his control over economic policy, has indicated that he is opposed to interest rate increases, a typical tool for central banks whose currencies are sliding.

Erdogan appeared to indicate that the entire alliance between Turkey - which joined North Atlantic Treaty Organisation in 1952 with strong American backing - and the U.S. was at stake.

The Turkish strongman also pointed out that Turkey was considering other markets and political alternatives to its "strategic partnership" with Washington.

"We're working to set up a call between the president and the president of Turkey to reaffirm our strong bond", she says.

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The arrival sent Twitter into a frenzy , with the 14-time major champion captivating the golfing world without hitting a shot. I didn't know when I was going to start and how many tournaments I was going to play, how well I was going to play.

Yet both have avoided the shellacking meted out to the Turkish lira because their central banks have shown a willingness in recent months to respond to drops in their currency (a weaker currency means higher imported inflation) by raising interest rates.

Spanish banks have $83.3 billion in exposure to Turkish markets, while French banks are owed $38.4 billion and Italian banks owed $17 billion.

"The solution to any and all issues should lie in dialogue, mutual understanding and goodwill", the Foreign Office said in a statement. But there was no sign so far of the hefty interest rate rises of 5 percent points or more that many market participants say will now be required to address the loss of confidence in the lira.

"It is not at all like we sank and we are finished".

"There are economic terrorists on social media", Erdogan told a gathering of Turkish ambassadors at the presidential palace in Ankara, adding that the judiciary and financial authorities were taking action in response.

"Our institutions will take necessary action from Monday in order to relieve the markets", he said, adding that the plan would center on "the state of our banks and the small and medium size enterprises" most affected by the lira's plunge.

American pastor Andrew Brunson has been held since October 2016 on terror and espionage charges and, if convicted, could face a jail term of 35 years.

Trump urges Erdogan on Twitter to free him, describing his continuing detention as "a total disgrace". Erdogan himself was elected prime minister in 2003 on the back of a major crisis two years earlier, but has traditionally always had Washington's staunch support.

Even before the current crisis, the global monetary environment had started turning against emerging currencies as central banks in developed economies, especially the Federal Reserve, began increasing rates as their economies improve.

The Central Bank also raised foreign exchange deposit limits for lira transactions of lenders from €7.2 billion ($8.2 billion) to €20 billion ($22.8 billion).

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