Taiwanese firms in Turkey face risk as local currency crashes

Andrew Cummings
August 14, 2018

It is unclear how Mr Erdogan intends to enforce the boycott.

Turkey moved to put investors at ease this weekend after the country's Finance Minister said an economic action plan would be put into place on Monday.

The Turkish president is angry that the United States has not taken more action against the Gulenist movement and what he said was a failure "to unequivocally condemn" the 2016 coup attempt.

Relations between North Atlantic Treaty Organisation allies Turkey and the United States are at a low point, hurt by a series of issues from diverging interests in Syria, Ankara's plan to buy Russian defence systems and the detention of an American pastor, Andrew Brunson.

U.S. President Donald Trump on Friday ramped up his attack on Turkey by doubling U.S. tariffs on Turkish aluminum and steel imports to 20 percent and 50 percent, respectively.

On another day of turmoil on financial markets, the Turkish currency plunged to a record low against the pound, taking its losses this year to 43 per cent.

In an interview with Hurriyet newspaper, Albayrak said a plan has been prepared for banks and the real economy sector, including small to midsized businesses that are the most affected by the foreign exchange fluctuations.

Turkey yesterday announced it would take legal action against hundreds of social media accounts it said were "creating a negative perception" of the economy amid the ongoing plummet of the Turkish lira.

He also made his now famous speech on the night of the July 2016 failed coup calling citizens out into the street through Facetime, an iPhone app.

The Turkish central bank vowed on Monday to provide banks with "all the liquidity they need". It said it would take legal measures against them but did not say what these would be.

Turkey's President Recep Tayyip Erdogan came under renewed pressure on Monday to reverse his economic policies as the troubled lira tumbled to record lows against the euro and dollar. Worries are building that "this may lead to contagion" across emerging markets, said Leow.

Since then, Trump and his U.S. Vice President Mike Pence have repeatedly called for his release, while Ankara said the decision was up to the courts.

Analysts said investors were now looking for safe havens in the form of the yen as well as the United States dollar.

Erdogan said his government would offer further incentives to companies planning to invest in Turkey and said firms should not be put off by economic uncertainty. 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.

Another factor to bear in mind, though, is that - as with the pound - some of these currency falls may appear more intense because of the U.S. dollar's current strength.

Investors globally headed for safe harbors including the USA dollar as the selloff in Turkey spread to emerging markets overseas, including South Africa's rand.

"MASAK started an investigation into people and institutions that spread fake news, such as those claiming that "the state will intervene to convert foreign exchange in accounts into Turkish lira" and "it will fix dollar exchange rate" by ditching floating rate policy, which is a main pillar of the free market", Treasure and Finance Ministry Press Undersecretary Ali Berber said in a tweet on August 13.

Other reports by iNewsToday