Erdogan says Turkey will stand strong against attempted economic coup

Christian Charisius  Reuters

Christian Charisius Reuters

Relations between Washington and Ankara have recently deteriorated because of the case of United States pastor Andrew Brunson detained in 2016 by the Turkish authorities.

The rating agency downgraded the rating by one notch to "B+" from "BB-" and kept Turkey's outlook at "stable" after the lira this year lost about 40 percent of its value against the USA dollar. As Francis Maguire reports, the lira's woes has seen investors flee from emerging market stocks.

Yesterday, ratings agencies Standard & Poor and Moody's downgraded Turkey's credit rating further to "junk" status.

"Turkey's been a problem for a long time", Trump told reporters as he departed the White House on Friday for a fundraiser in NY.

Turkish officials visited Washington last week with the idea of seeking leniency for a U.S. investigation into a Turkish bank, which a source told the Eye fell through, but opened a dialogue. We are not going to take it sitting down.

Over 160,000 people, including some Americans, have been detained after the government charged them with helping orchestrate the same coup, according to the UN.

Turkey and the U.S. are now experiencing strained relations following Washington's imposition of sanctions on two government ministers for not releasing American pastor Andrew Brunson, who faces terrorism-related charges in Turkey.

Brunson is being held on terrorism charges, which he denies. Mr Trump, who counts evangelical Christians among his core supporters, has increasingly championed the pastor's case.

It was not immediately clear what additional measures, if any, Trump could be considering.

US Treasury chief Steven Mnuchin earlier said the US could put more sanctions on Turkey.

Turkey has been holding pastor Andrew Brunson for two years on charges that he is linked to the Fethullah Gülen Movement, which Turkey says was responsible for a failed coup attempt in 2016.

It also forecast that inflation would peak at 22 percent over the next four months, and said the weakening lira was putting pressure on the indebted corporate sector and had considerably increased the funding risk for Turkey's banks.

The Turkish lira stood at 5.80 per dollar on Friday, up about 0.4 percent against the dollar. "Would the amount of Turkey's debts decrease?"

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As the row deepens, Turkey has sought to improve strained ties with European allies. The two countries already disagree over USA support for Kurdish fighters in Syria, as well as a plan by Turkey to buy Russian missiles. He said Turkey would "do well not to test @POTUS Trump's resolve" over the issue. "We remain hopeful there will be a prompt resolution".

Evgeny Bakhrevsky, director of the Moscow-based Heritage Institute and Middle East researcher, believes the USA approach to Turkey is similar to its usual stance on nations it comes into conflict with - working towards regime change.

"I call out to those in the United States".

The conflict between North Atlantic Treaty Organisation allies is even more personalized because of U.S. President Donald Trump and Turkish President Recep Tayyip Erdogan, whose uncompromising statements contribute to a sense that the tension will ratchet up before any possibility of a climbdown.

A banking watchdog's step to limit foreign exchange swap transactions also helped the currency.

Turkey and its firms face repayments of almost $3.8 billion on foreign currency bonds in October, Societe Generale has calculated.

The Turkish president emphasized Turkey's determination to eliminate all threats from Syria and Iraq.

Companies that for years have borrowed overseas at low interest rates have seen their cost of servicing foreign debt rise by a quarter in lira terms in two months.

The latest United States announcement came after Turkish Finance Minister Berat Albayrak tried to soothe the markets during an unprecedented conference call with hundreds of foreign investors, insisting Turkey would emerge "stronger" from the currency crisis and would not need an International Monetary Fund bailout.

The diplomatic dispute is worsening investors' concerns about Turkey's economic problems. Turkey is dependent on imports, priced in hard currency, for nearly all of its energy needs.

The rising tensions have caused the value of the lira to plunge by about a third of its value against the dollar since January.

The move by Turkey's Gulf ally offered further support to a lira rally after the Turkish central bank tightened liquidity and curbed selling of the currency.

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