World equities slip on Turkey currency woes

People walk past an electronic board showing Japan's Nikkei average outside a brokerage in Tokyo

Analysts at Nomura explained that with the plunge in the Turkish lira, investors' concerns of contagion have spread within the euro area's financial markets.

"We will be taking the necessary steps with our banks and banking watchdog in a speedy manner", he said.

Erdogan reiterated on Monday his view that the currency's crash had no economic basis, saying that USA sanctions imposed on Turkey over the terrorism trial of the pastor, Andrew Brunson, represented a "stab in the back" by a North Atlantic Treaty Organisation ally.

The sanctions caused market turmoil, which the central bank attempted - but failed - to soothe with a series of market-boosting measures.

"On the one hand you are going to be a strategic partner and on the other hand you put a bullet into your strategic partner", Erdogan said.

Turkish President Recep Tayyip Erdogan this morning claimed the country was under economic "siege", accusing the United States of trying to "stab it in the back".

Overnight it fell to a new record low of 7.2362 to the dollar before recovering to around 6.8222 in early Asian trading, similar to its trading price on Friday.

The interior ministry said it had so far identified 346 social media accounts carrying posts about the exchange rate that it said created a negative perception of the economy.

His comments followed US President Donald Trump's announcement that he would be imposing a 20 per cent duty on aluminum and 50 per cent one on steel imported from Turkey.

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

The Turkish president repeatedly has voiced displeasure over Washington's tepid response to the attempted mutiny and subsequent refusal to extradite Fethullah Gulen, who lives in self-imposed exile in Pennsylvania.

North Atlantic Treaty Organisation uses the Incirlik Air Base in Turkey to fight against IS and there has been some domestic pressure on Mr Erdogan to close it.

"The plunge in the lira, which began in May, now looks certain to push the Turkish economy into recession, and it may well trigger a banking crisis", Andrew Kenningham, chief global economist at Capital Economics, told Reuters.

Japan's Nikkei led the early running with a gain of 1.0 percent, while Australia added 0.4 percent. Inflation hit 15.9 percent annually in June.

The lira is now down around 45% against the dollar since the start of the year, making it far harder for Turkish companies to pay back loans they have taken out in the USA currency.

Spain's BBVA, Italy's UniCredit, France's BNP Paribas, Dutch bank ING and Britain's HSBC are the most exposed to Turkey and vulnerable to its free-falling currency. "With God's permission we will overcome this", Erdogan asserted while again rejecting pressure to raise interest rates to make the lira more attractive.

On Monday, during Asian trading hours, the lira fell almost 7 per cent - it has lost over 40 per cent so far this year - fuelling extreme volatility in emerging markets assets already overwhelmed by global trade spats, erratic USA policies and tightening liquidity amid rising interest rates. EMini futures for the S&P 500 edged up 0.2 percent, while 10-year Treasury yields held at 2.88 percent.

What are Turkish officials doing about the lira?

In its first statement since what was dubbed "Black Friday" in Turkey, the central bank said it was ready to take "all necessary measures" to ensure financial stability, promising to provide banks with "all the liquidity" they need.

Lower interest rates tend to stoke growth - as well as inflation.

"Erdogan clearly has a loyal base", he related to The Media Line, "which has stuck with him even during a clampdown on civil liberties". But now, he thinks rates would likely have to rise 35%.

But he has remained defiant while rallying Turks to counter what he describes as a foreign threat, urging citizens to sell dollars and gold to support the local currency and threatening to punish traitors for rumor-mongering.

Related News:

Most liked

Tiger Woods' PGA Championship arrival had the golf world shook
Gutted as he was to lose out to the nerveless Koepka, Woods was pure class in the way he conducted himself afterwards. I didn't play enough break, I hit it too hard, I had a huge spike mark in my line, and I pushed it.

Spotify Experimenting With Letting Free Users Skip Any Ad
Why it matters: Advertisers and listeners alike are paying close attention to Spotify's latest experiment, and for good reason. The streaming service is testing features which allow its free users to skip audio and video adverts whenever they play.

US investigators find black box of crashed Seattle plane
Military jets followed the plane as it was in the air. "There is nothing is more important to us", Tilden said. Gregoire said the Port, airlines and other stakeholders had already begun to review security processes .

Bethenny Frankel attends Dennis Shields' funeral, TMZ reports
She even called Dennis the love of her life as she reflected on their 26-year marriage and the years that followed. Bethenny Frankel and Dennis Shields are seen leaving SoHo House on June 14, 2016 in New York , New York.

These Ryder Cup choices should be easy for tight-lipped captain
As for the Ryder Cup, Furyk ended up with the same eight players who started the week atop the US standings. Not since Woods won four in a row through the 2001 Masters has anyone won majors at such an alarming rate.

Former Tour de France victor Jan Ullrich accused of assaulting escort
Also in a recent interview with German magazine Bild , Mr Ullrich said he had been in deep despair since separating from his wife. The woman was still being questioned by the police and the investigation is ongoing.

Battle For Key Afghan City Rages For Fourth Day
These and other moves boosted the number of United States troops in Afghanistan by at least 3,500 to a total of more than 14,000. He added that the city's electricity and water supply have had problems, and that food supplies were reportedly running low.

European Union Asks Saudi Arabia to Clarify On Jailed Activists
It was disappointing to see former Harper government minister John Baird criticize the government's stance against human rights violations in Saudi Arabia .

First Look Photo Revealed!
Disney recently wrapped shooting another animated-to-live-action pic, the sequel to Maleficent starring Angelina Jolie. In the photo, the actress wears a red robe and strikes a fierce pose with a sword in hand.

Bound Honda Civic facelift revealed
The news certain to intrigue most buyers, though, involves the Civic's safety systems. Cumulative sales of the 10th-generation Civic will surpass 1 million units this year.

Bayer shares nosedive after Monsanto weedkiller cancer ruling
Bayer tumbled more than 10 per cent on Monday as investors reacted to the shock USA ruling against freshly-acquired Monsanto. However, separate studies suggest otherwise.

Carmelo Anthony is officially a Houston Rocket
Included in his story about Anthony's official signing is a tidbit about how he's expected to come off the bench for Houston . He cleared waivers almost two weeks ago, opening the door for him to sign with any team as an unrestricted free agent.

Kasich Responds to Trump Attack With Laughing Putin GIF
John Kasich (R) of "tamping down enthusiasm" for Republican House candidate Troy Balderson . "Even Kasich's Lt. Trump visited OH to show support for Balderson, who he repeatedly endorsed prior to the special election.

Lee, Wrangler owner to spin off jeans unit into public company
In the most recent quarter, revenue from activewear surged 25 per cent and outdoor revenue rose 6 per cent. VF shares fell nearly four per cent Monday to $92.63 USA on the New York Stock Exchange.

This Fortnite Heavy Sniper Rifle Looks Scary
Indeed, it seems ideally suited to destroying structures, rather than engaging other players in a firefight. The Heavy Sniper is said to be "coming soon" and will be available in Epic and Legendary rarities.