Turkey Lira meltdown LIVE: Erdogan blasts US ‘global BULLIES’ as Merkel snubs Turkey

Monday, August 13, 2018
By Paul Martin

TURKEY’S lira crisis is causing contagion across the world with its record drop seeing the euro hit a one-year low.

Mon, Aug 13, 2018

The Turkish lira has taken a dramatic nosedive against the US dollar since last week after a major diplomatic fall out with Donald Trump.

The currency fell almost 9 percent in early trading, despite defiant words by president Recep Tayyip Erdoğan pledging action to reverse the slide.

It has since pulled back from a record low of 7.24 to the dollar after the central bank pledged to provide liquidity and cut reserve requirements for Turkish banks.

But the meltdown continues to rattle global markets with analysts are growing increasingly nervous the crash could be have a disastrous knock-on effect across the world.

Banks in Spain, Italy and France are most at risk of contagion, as well as emerging markets such as Argentina and South Africa which are exposed to Turkish debt, according to analysts.

Asia suffered a hit overnight although experts expect it to emerged unscathed thanks to to ample foreign exchange reserves and prudent fiscal and monetary policies.

The lira has fallen more than 40 percent this year amid tension over Mr Erdoğan’s control over the economy and deteriorating relations with the US.

Mr Erdoğan has accused foreign countries of waging war on Turkey and said his government would respond with trade measures to reduce reliance on the dollar and US markets.

Major Turkish bank Garanti has responded to the crisis by blocking customers from open new foreign exchange positions, making it harder for people to seel lira for US dollars, pounds and euros.

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