Turkey on the Economic Brink, Explained in a Dozen Charts

The euro has dropped today after the Turkish lira ad Russian rouble plummeted

The euro has dropped today after the Turkish lira ad Russian rouble plummeted

The lira plunged to as low as 6 against the USA dollar on Friday, a day after a Turkish delegation returned from talks in Washington with no apparent solutions to their simmering crisis.

The Turkish lira fell against the United States dollar due to mounting tensions between Turkey and the U.S. in the wake of Ankara's refusal to release American pastor Andrew Brunson who is suspected of being involved with a terrorist group.

Both countries have imposed sanctions on senior ministers and the countries failed to make progess during talks this week.

President Recep Tayyip Erdogan on Thursday portrayed the currency drop as a "campaign" to harm Turkey.

"If they have their dollars, we have our people, our God". We are working hard.

"The rand and other EM currencies on the back foot as sentiment sours", Rand Merchant Bank analysts said in a note, adding that this was due to "geopolitical concerns and the negative impact of the US-China trade spat on global growth".

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The business environment in the country is positive with increased improvements in the business confidence levels. This is largely due to reduced demand by investors as the dynamics of the housing market have changed.

Investors are also concerned about President Erdogan's interference in affairs of the country's central bank.

Inflation stands at almost 16% but Turkey's central bank is reluctant to act - especially with the president having described himself as an "enemy of interest rates". He has presented an economic action plan for the next 100 days. Markets are deeply concerned over the direction of economic policy in Turkey where inflation has hit almost 16 percent while the central bank remains reluctant to raise rates in response.

"You have some very odd politics with the president interfering with monetary policy - they are picking fights with Europe, they are picking fights with the Americans", said Paul McNamara, an investment director at GAM London Limited, as quoted by Reuters.

And even if eurozone exports to Turkey fell through the floor, previous experience has shown that European companies are "pretty quick in identifying and switching to new markets".

Turkey's ties with the U.S. have soured over Washington's refusal to extradite Fetullah Gulen, who is accused of masterminding a 2016 coup against President Erdogan.

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