Turkish lira ‘meltdown’ sends global currencies tumbling: Indian rupee hits a record low, while the Argentine peso and South African rand plummet
- Turkish lira has slipped dramatically amid country’s worsening ties with the US
- Emerging market currencies sold off by investors spooked by Turkey’s crisis
- Indian rupee hit a low of 70 to the dollar today while Argentine peso also fell
The Turkish lira crisis has sent global currencies tumbling with the Indian rupee hitting a record low and the Argentine peso and South African rand plummeting.
The lira has slipped dramatically this year, hit by worries over President Tayyip Erdogan’s calls for lower interest rates and worsening ties with the United States.
With emerging market currencies sold off by spooked investors, the Indian rupee today hit a low of 70 to the dollar while South Africa, Argentina, Mexico, Brazil and Russia have all seen their currencies dip over the past week.
Those countries, like Turkey, remain heavily dependent on foreign capital, especially the dollar.
The Turkish lira crisis has sent global currencies tumbling with the Indian rupee hitting a record low and the Argentine peso and South African rand plummeting
The lira has slipped dramatically this year, hit by worries over President Tayyip Erdogan’s calls for lower interest rates and worsening ties with the United States. Pictured: Traders work on the floor of the New York Stock Exchange
The weakness of the Turkish currency has rippled through global markets, with its drop of as much as 18 percent on Friday hitting U.S. and European stocks as investors fretted about banks’ exposure to Turkey.
The lira also lost almost 10 per cent on Monday with the Daily Telegraph quoting one analyst as warning of ‘total meltdown’.
But concerns about it eased in Asian markets on Tuesday. It traded in a range of 6.86-6.9441 in Asia.
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Analysts say the crisis has been a long time coming and reflects Turkey’s refusal to raise interest rates to curb double-digit inflation and cool an overheated economy.
President Erdogan has said that Turkey is the target of an economic war, denying that economic fundamentals were behind the lira weakness.
Last week, US President Donald Trump announced a doubling of tariffs on steel and aluminium from Turkey.
Even though President Erdogan blamed the US for the escalating crisis, he also said his country’s economic problems were just a ‘storm in a teacup’.
President Erdogan has said that Turkey is the target of an economic war, denying that economic fundamentals were behind the lira weakness
Speaking yesterday, he said: ‘We are together in Nato and then you stab your strategic partner in the back.’
Erdogan on Monday accused ‘economic terrorists’ of plotting to harm Turkey by spreading false reports and said they would face the full force of the law, as authorities launched investigations of those suspected of involvement.
‘There are economic terrorists on social media,’ Erdogan told a gathering of Turkish ambassadors at the presidential palace in Ankara, adding that the judiciary and financial authorities were taking action in response.
‘They are truly a network of treason,’ he added. ‘We will not give them the time of day… We will make those spreading speculations pay the necessary price’.
Erdogan, who gained sweeping new powers following his re-election in June, said rumours had been spread that authorities might impose capital controls in response to the slump in the currency, which tumbled as much as 18 percent on Friday alone.
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. It said it would take legal measures against them but did not say what these would be.
Separately, the Istanbul and Ankara prosecutor’s offices launched investigations into individuals suspected of being involved in actions that threaten Turkey’s economic security, broadcaster CNN Turk and state news agency Anadolu reported.
Turkey’s Capital Markets Board (SPK) and financial crime board have also said they would take legal steps against those who spread misinformation about financial institutions and firms, or reports that the government would seize foreign-currency deposits.
Turkey has become the most popular destination for British tourists this summer as the lira crashes in value
Earlier on Monday, Finance Minister Berat Albayrak, who is also Erdogan’s son-in-law, said Turkey would start rolling out an economic action plan on Monday.
Albayrak stressed the importance of budget discipline, and ruled out any seizure or conversion of dollar-denominated bank deposits into lira.
Meanwhile, Turkey has become the most popular destination for British tourists this summer as the lira crashes in value.
Antalya airport in the south of the country has welcomed more visitors than the islands of Tenerife and Mallorca as holidaymakers take advantage of the growing economic crisis in Turkey.
Two million people flew into Antalya in June, according to the Guardian, while travel company Thomas Cook said there has been a 63 per cent increase in bookings to Turkey.
The airline said they now put on 57 flights a week from Britain to Antalya, but only 41 to Mallorca.
It comes after the Post Office revealed sales of the Turkish lira was three times higher than last year.
This year, the currency has plunged in value against the pound, losing 43 per cent of its value.
British holidaymakers have taken advantage of the uncertainty surrounding the lira as airline Jet2 is selling twice as many seats on flights to Turkey this year.
Andrew Brown of Post Office Travel Money said sales ‘have been rising all year as it became clear that holiday costs in resorts like Marmaris had been falling steadily as sterling surged in value.
‘We have seen our currency sales surge by 198pc compared with the same time last year.’
The Post Office said holidaymakers are able to get 4,091 lira for £500 this summer, as opposed to just 2,174 lira in 2017.
Travel company TUI also said Turkey is their third most popular destination, behind Spain and Greece.
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