Turkish President Tayyip Erdogan Makes Statement After Cabinet Meeting in Ankara, Turkey, May 17, 2021.
Murat Cetinmuhurdar | Reuters
The Turkish lira fell to a fresh record low on Monday after President Recep Tayyip Erdogan said he was pursuing the expulsion of ten foreign ambassadors.
The beleaguered currency was trading at 9.738 to the dollar at 11:45 am London time on Monday, a historic low reached of 9.82 to the dollar earlier in day.
Erdogan declared during a rally on Saturday that he had demanded the status of “persona non grata” to be applied to the ambassadors of the US and nine other Western countries after they called for the release of Turkish philanthropist Osman Kavala from prison.
the lira, met already hit An record low the previous week after the central point of Turkey bank cut it key interest rate despite growing inflation, in for more pain if Erdogan continues on this path, analysts warned. It is down 24% from the dollar so far this year.
“If Erdogan’s Threat Is Carry Out” out it would trigger the worst crisis between Turkey and the West world since the AKP came in power in 2002,” Wolfango Piccoli, Teneo’s co-chairman, wrote Monday, referring to the president’s political policies party.
Observers note that the State Department does not seem to bear yet out Erdogan’s instructions, if “none” of diplomats have been formally notified,” Piccoli wrote minister of Foreign Affairs Mevlut Cavusoglu, responsible for to wear out the order, has not responded yet on the matter.
Erdogan’s comments fueled fear of heightened tensions between the West and Turkey, causing the already weak lira. Investors have long been concerned over the central bank’s lack of independence from Erdogan, who has said that interest rates are “the devil” and holds the unconventional belief that: cutting they will reduce inflation – the opposite of what most economists say is the case.
If the ambassadors were to be expelled, “the lack of of Western Diplomatic Representative in Ankara will hurt Erdogan,” said Timothy Ash, emerging markets strategist at Bluebay Asset Management. reduce Interaction with the Erdogan regime and investments in Turkey will suffer.”
the 10 countries whose ambassadors were targeted by Erdogan – the US, Canada, France, Germany, Denmark, Norway, Sweden, Finland, New Zealand and the Netherlands – account for half of Turkey’s top 10 trading partner. The group also includes seven NATO members and six EU members.
“It goes without saying that the beleaguered Turkish lira would come under intense pressure after being established” various record lows over the past week,” Teneo’s Piccoli added.
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