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July 13, 2018 www.intellinews.com I Page 3
expected Trump to say anything firm on Russia, however, they must have been disappointed.
At his presser, Trump offered an impression that he would be happy not to step on Russia’s toes too much. Trump called Vladimir Putin – who he is meeting on July 16 in Helsinki – a “competitor.”
“I think we’ll get along well. But ultimately he’s a competitor. He’s representing Russia. I’m rep- resenting the United States. So in a sense, we’re competitors, not a question of friend or enemy. He’s not my enemy,” Trump said.
“Hopefully someday, maybe, he’ll be a friend. It could happen but I don’t know him very well,” he added.
Erdogan’s new cabinet announcement causes markets to tumble
try to grown-up hands. However, Erdogan named his son-in-law Berat Albayrak as finance minister, replacing Mehmet Simsek, who was widely seen by investors as one of the few top Turkish politi- cians who could rein in Erdogan’s “low interest rates at any cost” obsession.
The lira went as low as 4.55 to 4.73 to the
dollar within an hour of the news breaking — falling more than on the eve of the coup attempt against Erdogan two years ago. On July 11, lira saw as high as 4.7619 and it was trading at 4.7493, up 0.89% d/d, as of 13:00 local time.
The lira has already lost 20% of its value this year and further falls will only put more pressure on Turkey’s heavily indebted corporates.
The story of the lira’s collapse in recent months is not for the faint-hearted. Despite the central bank’s emergency action, the country could still go over the
Asked about Crimea, Trump said the annexation took place on “Obama’s watch, not on Trump’s watch,” before going on to say that Russians have made big investments in Crimea, such as the Kerch Strait bridge linking the Russian mainland to the annexed peninsula.
That gave an impression of the US president con- ceding the events in Crimea have already gone too far for Trump to be able to react and raised fears that the US president – whose 2016 campaign is under scrutiny for alleged Russian meddling – is more willing to accommodate Moscow than be
a Nato leader loyal to other allied countries.
cliff edge and slip into a classic emerging market currency-and-debt crisis. Turkish sovereign bond yields were pushed over 20% in the last week, their highest level since 2008; soaring bond yields are of- ten a precursor of emerging market financial crises.
Turkey is heavily dependent on external borrowing due to its chronic current account deficit. Debt- financed consumption has been the prime feature of the country’s remarkable economic growth achieved during much of the past decade, while the private sector’s share in total external borrow- ing has been on the rise in recent years. Ukraine and Turkey are two of the “vulnerable three” countries most at risk to US tightening along with Argentina, Fitch said in a note on May 16.
Despite the palpable dangers, Erdogan used his inauguration to reiterate his intension to bring interest rates down. Turkish inflation has soared in recent weeks leading analysts to expect a rate hike at the next central bank policy meeting, but now no one has any idea of what will happen.
Erdogan also nixed the five-year term for the gover- nor of the central bank and appears to have taken over the authority for appointing the next governor from the now greatly diminished parliament.