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Alexander Bueso Sharecast News
10 Aug, 2018 13:32 10 Aug, 2018 15:20

Turkey's Erdogan entrusts country to divine providence amid currency rout

Turkey's President did not deliver any policy-relevant remarks on Friday, instead invoking God, telling an audience at a public rally he wanted to put their well-being in the Creator's hands.

The lira weakened following his speech, with the selling intensifying following a 'tweet' from the US President announcing new sanctions against the country.

Speaking in front of a large poster carrying his image, next to that of Kemal Ataturk, the reformer who founded the modern Turkish republic, Erdogan limited himself to defending his government's programmes in support of stone-carving and hand-made textiles in the region.

With the support of his audience, Erdogan said, "there is no crisis, no terror organisation we cannot fight".

His remarks echoed those made on Thursday evening, when Erdogan said: "If they have dollars, we have our people, our righteousness and our God."

Immediately afterwards, his son-in-law, Berat Albayrak, the country's recently-appointed finance minister, delivered a presentation of what he dubbed as the country's 'new economic model'.

Analysts at TD Securities described his remarks as "uninspiring at best", with the only 'positive' being a verbal commitment to strengthen the independence of the central bank.

"The Central Bank's independence should always continue as a principle. Its independence is very important. Reinforcing financial stability will be one of our high priority targets," Albayrak said.

However, Albayrak also spoke of "strong coordination under one leadership of fiscal and monetary policy", which TD said was "not necessarily a good omen".

"Unless the CBRT hikes promptly (we think to around 30%), the lira may suffer its worst crisis in nearly two decades," TD added.

As of 1329 BST, soon after Albayrak began speaking, the US dollar was 9.43% higher versus the Turkish lira to 6.0740, following a brief second spike to the 6.3005 mark.

But by 1500 BST, the Greenback as 17.68% higher against the lira, at 6.5320, having hit an intra-session high of 6.8703.

Stoking the selling, Donald Trump said via social media, "I have just authorized a doubling of Tariffs on Steel and Aluminum with respect to Turkey as their currency, the Turkish Lira, slides rapidly downward against our very strong Dollar! Aluminum will now be 20% and Steel 50%. Our relations with Turkey are not good at this time!"

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