Connect with us

Business

Lira eases back from historic 15 pct crash as Turkey stumbles into unknown

Turkey’s lira clawed back some losses on Wednesday after a 15 percent crash to record lows a day earlier driven by President Recep Tayyip Erdogan’s defense of rate cuts, but volatility and steep price rises still worried consumers and investors.

The lira has hit new all-time lows for 11 consecutive sessions and its losses against the dollar this year stand at 40 percent, with a 19 percent decline since the beginning of last week alone.

On Wednesday morning, the lira weakened as far as 13.1500 to the US currency. It stood at 12.6005 by 0919 GMT, 0.8 percent firmer than Tuesday’s close.

For the latest headlines, follow our Google News channel online or via the app.

Bankers said liquidity had virtually dried up with moves to the record low of 13.45 driven by panic dollar buying.

Many Turks, already grappling with inflation of around 20 percent, fear price rises will accelerate 23.

Opposition politicians have accused Erdogan of dragging the country into crisis.

Retailers too are struggling with the turmoil, with some websites stopping sales of electronic products on Wednesday.

A sales representative at an Istanbul Apple store said people were thinking of electronics as an investment as much as items to use. “It is pretty surreal with the economy and all, but people see it as a store of value,” the representative said.

Despite Erdogan defending the central bank’s monetary policy and vowing to win his “economic war of independence,” there is widespread criticism from those calling for action to reverse the slide in the currency, including from top economists.

There was no hint at an intervention to stem the meltdown.

The central bank said on Tuesday it could only do so under certain conditions in “excessive volatility.”

“With today’s exchange rate, official inflation could exceed 30 percent in the coming months. With the current deposit rate this means a real interest rate of -15 percent,” former central bank chief economist Hakan Kara wrote on Twitter.

“If measures are not taken urgently, the financial system cannot cope with this,” he added.

Erdogan has pressured the central bank to move to an aggressive easing cycle with the goal of boosting exports, investment and jobs.

But many economists have described the rate cuts as reckless and opposition politicians called for immediate elections. Turks told Reuters the dizzying currency collapse was upending their household budgets and plans for the future.

“The deviation from orthodox policies has a major toll on the economy,” said Selva Demiralp, director of the Koc University-TUSIAD Economic Research Forum and a former US Federal Reserve economist.

“There is an easing cycle on paper, but it will have a net contractionary impact on the economy,” she said, commenting on the rate cuts and apparent indifference to the consequent lira depreciation.

Following a meeting between Erdogan and central bank Governor Sahap Kavcioglu, the bank issued a statement saying the selloff was “unrealistic and completely detached” from economic fundamentals.

Tuesday’s slide was the lira’s largest since the height of a currency crisis in 2018 that led to a sharp recession and three years of below-par economic growth and double-digit inflation.

The central bank has slashed rates by a total of 400 points since September, leaving real yields deeply negative as virtually all other central banks have either begun tightening policy to stem rising inflation, or are preparing to do so.

Read more:

Turkish opposition parties join ranks to push out Erdogan: Report

Turkey’s Erdogan wades again into central bank policy, looks to see lower rates

Turkey working to get out of FATF grey list for failing to head off money laundering

Continue Reading
Click to comment

Leave a Reply

Your email address will not be published. Required fields are marked *

Business

Credit Suisse managers could face disciplinary action, Swiss regulator says


Swiss financial regulator FINMA said it was considering whether to take disciplinary action against Credit Suisse managers after Switzerland’s second largest bank had to be rescued last week by UBS.
FINMA President Marlene Amstad told Swiss newspaper NZZ am Sonntag it was “still open” whether new proceedings would be started, but the regulator’s main focus was on “the transitional phase of integration” and “preserving financial stability.”

For the latest headlines, follow our Google News channel online or via the app.
UBS agreed to buy Credit Suisse for 3 billion Swiss francs ($3.26 billion) in stock a week ago and to assume up to 5 billion francs in losses in a merger engineered by Swiss authorities during a period of market turmoil in global banking.
Credit Suisse on Sunday declined to comment on the FINMA President’s comments when asked by Reuters for a response.
Asked whether FINMA is looking into holding current Credit Suisse managers accountable for the collapse of Switzerland’s second-largest bank, Amstad said it is “exploring the options”.
“CS had a cultural problem that translated into a lack of responsi-bilities,” Amstad was quoted as saying by NZZ, adding: “Numerous mistakes were made over several years”.
FINMA had conducted six public “enforcement proceedings” against Credit Suisse in recent years, Amstad said.
“We have intervened and used our strongest instruments,” she said of its previous moves.
Amstad also defended Switzerland’s decision to write down 16 billion Swiss francs of Credit Suisse Additional Tier 1 (AT1) debt, to zero as part of the forced rescue merger.
“The AT1 instruments contractually provide that they will be fully written off in the event of a trigger event, in particular the granting of extraordinary government support,” Amstad said.
“The bonds were created precisely for such situations.”

Read more:

UBS seeks dealmaking revival in Middle East with Credit Suisse takeover

Credit Suisse buyout was for financial stability: Bank chief

Credit Suisse, UBS deal: What you need to know

Continue Reading

Business

Aramco affirms support for China’s energy security


Saudi Arabian oil giant Aramco affirmed on Sunday its support for China’s long-term energy security and development, the company’s CEO Amin Nasser said in remarks made before a forum in Beijing.

For the latest headlines, follow our Google News channel online or via the app.

Nasser said that the company has partnerships and emission-reducing technologies with China to make lower carbon products.

Read more:

Kuwait Oil Co dealing with ‘limited fire’ at well where oil leak occurred last week

Oil prices hit lowest in 15 months on banking fears

European Commission to revamp power market rules, aiming to blunt price spikes

Continue Reading

Business

Kuwait Oil Co dealing with ‘limited fire’ at well where oil leak occurred last week


Kuwait Oil Company said on Sunday it is dealing with a “limited fire” that erupted at a well where oil leaked last week.
The company said in a statement that no injuries had been reported at the scene.
“The company’s operations in the area have not been affected,” the statement read.
Kuwait Oil Company declared a state of emergency last Monday due to an oil leak in the west of the country.

Developing

Continue Reading

Trending