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Turkish President Tayyip Erdogan's spokesman said Washington
must respect the legal process concerning the pastor, Andrew
Brunson, whose trial in Turkey on terrorism charges has
infuriated U.S. President Donald Trump.
The lira <TRYTOM=D3> dipped as far as 6.1350 against the dollar
and was 0.7 percent weaker on the day at 6.0785 at 1200 GMT. The
dollar was boosted by U.S. Federal Reserve minutes indicating it
would raise interest rates in September.
The lira is down 37 percent this year, with the crisis in
Turkish-U.S. ties exacerbating losses prompted by concerns about
Erdogan's influence on monetary policy. He says interest rates
are the "mother and father of all evil" and opposes hiking them.
Economists said Turkey had still to convince investors it was
ready to take measures needed to shore up its economy.
"The problems of Turkey are not fixed," said Cristian Maggio,
head of emerging markets strategy at TD Securities. "There is
not one single structural solution or reform that has been
advanced or detailed by the local authorities."
Maggio added that lira volatility had increased due to thin
trading volumes as Turkish markets are closed all week for the
Muslim festival of Eid al-Adha.
Erdogan's spokesman, Ibrahim Kalin, told Reuters overnight that
comments by Trump's national security adviser showed the United
States was targeting Turkey's economy.
John Bolton told Reuters that Turkey had made a "big mistake" in
not freeing Brunson, and was skeptical about $15 billion of
investment support from Qatar, saying it was "utterly
insufficient to have an impact on Turkey's economy".
"(Bolton's) statement is proof that the Trump administration is
targeting a NATO ally as part of an economic war," Kalin said.
"The Trump administration has ... established that it intends to
use trade, tariffs and sanctions to start a global trade war."
"RESTRICTIVE AND PUNITIVE"
Until Kalin's statement, Turkish officials had been silent about
comments on Turkey this week by Trump and Bolton. Trump told
Reuters on Monday he would make no concessions to Ankara in
return for Brunson's release.
Brunson, who has lived in Turkey for two decades, has been
detained for 21 months and is now under house arrest. He denies
the charges against him.
Trump, who counts evangelical Christians among his core voter
base, has doubled tariffs on metal imports from Turkey,
prompting Ankara to raise tariffs on U.S. car, alcohol and
tobacco imports by the same amount.
Ankara has also initiated a WTO dispute complaint on the
tariffs.
"Turkey will protect its national interests on every platform
and work with the rest of the world against restrictive and
punitive measures," Kalin said, adding that Qatar's support had
had a positive impact on markets.
"The steps we have taken to prevent an assault on the Turkish
lira yielded positive results" and the Finance Ministry and
other institutions will continue to "take precautions and
protect our economy", Kalin added.
A German government source said the International Monetary Fund
could help Turkey weather its currency crisis, but Finance
Minister Berat Albayrak, Erdogan's son-in-law, has said Ankara
has no plans to go to the IMF.
Cemil Ertem, Erdogan's chief economic adviser, reinforced that
message on Thursday, saying Turkey must deepen economic and
trade ties with the European Union and other countries.
"Let alone the IMF, not one crumb of the IMF mentality must come
through our door after this. If it does then we will face a real
collapse and crisis," Ertem wrote in Milliyet newspaper,
describing the "attack" on Turkey's economy as a "fantastic
opportunity" for all emerging economies.
The analyst Maggio highlighted market concerns that Turkey's
central bank has not been hiking interest rates despite
double-digit inflation and the ailing lira.
"They just squeezed liquidity out of the market but now they
have started to reduce that squeeze, which is removing the
support the lira received," said Maggio. "I would be very
surprised to see a sustained rally in the lira."
In his comments to Reuters, Kalin also said Mehmet Hakan Atilla,
a banker at Turkey's state-owned Halkbank <HALKB.IS>, had been
unjustly convicted in the United States for taking part in a
scheme to help Iran evade U.S. sanctions. Atilla was sentenced
to 32 months in jail in May.
"It is unacceptable that certain baseless and false allegations
are made against Halkbank to weaken this public bank," Kalin
added.
"Turkey is extremely frustrated with this process."
(Additional reporting by Claire Milhench in London; Writing by
Daren Butler; Editing by Himani Sarkar and Kim Coghill; editing
by Gareth Jones)
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