Turkey to boycott US-made electronic products: Erdogan

Randal Sanchez
August 14, 2018

Turkish President Recep Tayyip Erdogan vowed that his country would boycott USA -made electronic goods, including iPhones.

The MSCI world equity index, which tracks shares in 47 countries, was down 0.5 percent on Monday and 1.6 percent since Friday's open as the Turkish lira plunged to a record low, forcing the country's finance minister to announce an economic action plan to ease nerves.

Relations between the countries soured after Trump threatened to impose sanctions on Turkey over American Pastor Andrew Craig Brunson, who was arrested in the Aegean province of Izmir in December 2016.

The ruckus between Turkey and the U.S. has impacted on other countries' currencies, including the Indian rupee, as investors fear the lira's wobbles could spread to developing nations.

Turkey and the United States, two North Atlantic Treaty Organisation allies, have been locked in bitter disputes over a string of issues from a pastor's detention on terror charges to the war in Syria. Erdogan says his country is under an economic "siege" that has nothing to do with its economic indicators. "We are taking the necessary steps against these attacks and will continue to do so".

Mr Erdogan has also been getting closer to Russian Federation.

In his statement, Erdogan also said that interest rates are a means of exploitation, making the rich richer and the poorer even poorer.

Erdogan won a second term in office in June under a new system of government that gives him sweeping powers.

But now the U.S. Federal Reserve is raising rates.

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Although the lira won a small respite on Tuesday, investors say measures taken by the Central Bank on Monday to ensure liquidity fail to address the root cause of lira weakness.

In times of high uncertainty, banks tend to shy away from lending to each other.

World share markets regained their footing on Tuesday as the threat from the collapse of the Turkish lira ebbed and reassuring German data offset signs of slowing growth in China.

While analysts worry about Turkey and other emerging economies in their own right, they seem confident for now that advanced economies have little to fear, including the neighbouring eurozone. Ultra-low interest rates in the USA and Europe have for years encouraged companies in Turkey to borrow in foreign currencies.

CONTAGION FEARS: Emerging markets are falling out of favour due to problems in Turkey and Argentina. Its drop of as much as 18 percent on Friday hit European and US stocks as investors fretted about banks' exposure to Turkey.

So far, the impact on developed economies has been relatively contained.

The US is Turkey's largest market for the export of steel, accounting for 1.5 million tons in 2017. A few European banks have business there that could lead to losses, but that is not expected to pose a systemic danger to the region. That draws capital away from Turkey, weakening the currency.

Erdogan has not backed down over the rift with the USA and has used the ensuing crisis to his advantage by blaming it on a foreign conspiracy, telling party members in the city of Trabzon on Sunday: "The aim of the operation is to make Turkey surrender in all areas from finance to politics".

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