United States official warns of more actions against Turkey if pastor not freed

A trader works on the floor of the New York Stock Exchange shortly after the opening bell

A trader works on the floor of the New York Stock Exchange shortly after the opening bell

Turkey's President Recep Tayyip Erdogan has said his country will boycott United States electronic products, after Washington imposed punitive sanctions on Ankara. And as Nicholas Colas, co-founder of DataTrek Research, wrote in a note Tuesday morning, the drop in the price of gold in the face of an emerging markets currency crisis reflects confidence that Turkey's problems will not spill over to the US economy or derail the Federal Reserve from raising rates.

"We will implement a boycott against America's electronic goods", Erdogan told the conference.

"If [the US] has the iPhone, there's Samsung on the other side", Mr Erdogan said, referring to Apple and its South Korean competitor. He also said on Friday that he had ordered to double United States tariffs on Turkish aluminum and steel imports to 20 percent and 50 percent, respectively.

Bloomberg News noted that Vestel's phones use American-made components, so it might have trouble rising to Erdogan's challenge over the long term, but in the short term, the company's stock rose nine percent after Erdogan's speech.

Erdogan has been repeatedly photographed with Apple products including the iPhone and iPad.

Erdoğan has accused the U.S. of stabbing Turkey in the back, the government has announced a crackdown on those on social media spreading fake news about the crisis and the central bank has eased financing requirements for Turkish banks.

Investors seemed to look through the fiery rhetoric, pushing the lira off record lows on confirmation that Turkish and USA government officials met on Monday.

Presidential adviser and spokesman Ibrahim Kalin wrote on Twitter: "Our ministry of treasury and finance, Central Bank, Capital Markets Board, Banking Regulation and Supervision Agency and other institutions take necessary steps for financial stability".

Erdogan made the comments in retaliation against United States sanctions, which have helped worsen an economic crisis in the country.

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"What you want to see is tight monetary policy, a tight fiscal policy and a recognition that there might be some short-term economic pain - but without it there's just no credibility of promises to restabilize things", said Craig Botham, Emerging Markets Economist at Schroders. He added that US electronics would have sanctions placed on them. They get revenues in lira, which are worth less and less, but must repay loans in dollars or euros. The exchange value of the lira has fallen about 40 percent against the USA dollar since January. The fear is of a full-blown emerging market crisis.

Bankers said on Monday the central bank would meet banks' lira liquidity needs at the overnight rate of 19.25 per cent - 150 basis points above the benchmark weekly repo rate - a move they said could be interpreted as a small, covert rate hike.

The Turkish envoy conveyed the message the pressure and threats would only lead to a "chaos" in relations which could only improve after Washington abandons the language of "threats", said Turkey's foreign minister Mevlut Cavusoglu.

Albayrak said on Tuesday Turkey would press ahead with its action plan to prop up the lira against the dollar, calling for a trade that is conducted "in our own currency".

What impact could the drop in the lira have on consumers in Hong Kong and NY?

Turkey has held Christian pastor Andrew Brunson in custody for almost two years on espionage and terrorism charges tied to an attempted coup of Erdogan in 2016.

On Tuesday, Brunson's Turkish lawyer petitioned the court to release the American from house arrest, after a previous appeal was denied.

"Every part of [Vestel phones] are American", Rao said.

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