Erdogan Blames US for 'Heinous Economic Attack' on Turkey

Erdogan appoints himself chairman of Turkey's sovereign wealth fund

The Turkish central bank on Thursday hiked the one week repo auction rate 625 basis points from 17.75 per cent to 24 per cent, significantly higher than the Bloomberg consensus of 21 per cent.

Traders work on the floor at the New York Stock Exchange (NYSE) at the end of the day's trading in Manhattan, New York, U.S., August 27, 2018.

The currency has plunged in recent months and even after Thursday's rise was down nearly 39% against the dollar this year.

The banks borrow on worldwide markets in hard currencies, hedging dollar liabilities with gold deposits, rather than the volatile lira, even though their loan assets are denominated in lira.

Before the move by policy makers in Ankara Thursday, the run on the currency forced the central bank to deliver some tightening where it could.

Facing a deep slide in the lira and a steep run higher in inflation, the central bank felt compelled to lift rates to restore investor confidence-a risky gambit that boosted the lira but could further damage the economy.

The unexpected magnitude of the massive jump from the previous rate of 17.5% seems to have been forced on TCMB by weeks of pressure from nervous global investors fretting over the dismal state of the economy, and the pervasive weakness of the Turkish lira.

Turkish President Tayyip Erdogan has appointed himself chairman of the country's sovereign wealth fund and completely changed its board, naming Finance Minister Berat Albayrak as his deputy, the country's Official Gazette said on Wednesday.

After rising as high as 6.1442 to the dollar, the lira eased to 6.1025 on Friday.

Speculation has been growing that the monetary authority will deliver a sizeable interest-rate increase Thursday after it signalled potential action last week to help stem accelerating inflation.

Washington imposed sanctions on two government ministers and doubled tariffs on steel and aluminum imports from Turkey. In August of a year ago, one dollar bought Three.5 lira; at some level of the last month it fetched more than 6. Frequent financial conception holds the other, that elevated charges are outmoded to curb inflation.

Erdogan has also announced plans for a 45-kilometre (28 mile) canal that would turn the western side of Istanbul into an island and is estimated to cost around $16 billion.

Erdogan has no longer helped his case by doubling down on his intransigence some other time the USA, analysts remark.

Turkey's President Recep Tayyip Erdogan on Friday said Turkey came under a "heinous economic attack" after statements from the United States.

However, speaking to Middle East Eye, Julian Walker, a director at Spot Blue, a UK-based company that specialises in property in Turkey, said: "I don't think this move will be awful for business". Japan's Nikkei stock index was 1.2 percent higher.



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