Turkey assures investors on crisis

Says it is ‘a market anomaly’

TURKEY’S Finance Minister Berat Albayrak has assured international investors that the country will emerge stronger from its currency crisis, insisting that its banks are healthy and strong.

In a conference call with thousands of investors and economists yesterday, Albayrak, who is President Tayyip Erdogan’s son-in-law, said Turkey fully understood and recognised all its domestic challenges, but was dealing with what he described as “a market anomaly”.

The Turkish lira hit a record low of 7.24 to the dollar this week, down 40 percent this year, as investors fretted over Erdogan’s influence over monetary policy and a bitter dispute with the US.

Facing Turkey’s gravest currency crisis since 2001 in his first month in the job, Albayrak, 40, has the daunting task of reassuring investors that the economy is not hostage to political interference.

Albayrak, a former company executive who has a PhD in finance, said Turkey would not hesitate to provide support to the banking sector. The banks were capable of managing the volatility and there had been no major flow of cash out of deposits lately, he added.

Before he spoke, the Turkish lira strengthened more than 3 percent, despite signs that the rift with the US is as wide as ever. However, the currency market’s reaction to his conference call – in which he also said Turkey had no plans to seek help from the International Monetary Fund or impose capital controls to stop money from flowing abroad – was measured.

After he finished speaking, the lira was little changed at about 34 percent weaker to the dollar this year.

Earlier in the day, the currency had shrugged off US comments ruling out the removal of steel tariffs on Turkey, even if it freed an American pastor who was at the centre of the complex feud between Washington and Ankara.

The currency gained some support from the announcement on Wednesday of a Qatari pledge to invest $15 billion (R217.3bn) in Turkey.

JP Morgan said moves by Turkish authorities to curb the lira’s fall showed they were committed to stabilising the currency with technical measures, such as restricting foreign exchange swops and cancelling repo auctions to push up the average cost of bank funding.

Little incentive

“Yet at the same time (Turkish authorities) are reluctant to adopt orthodox policy frameworks,” JP Morgan said.

On Wednesday the White House said it would not remove steel tariffs on Turkey, appearing to give Ankara little incentive to work for the release of the pastor Andrew Brunson, who is on trial in Turkey on terrorism charges.

Washington wants the evangelical Christian freed, but Turkish officials say the case is a matter for the courts.

President Donald Trump doubled tariffs on Turkish metals exports to the US last week, prompting Ankara to raise tariffs on US cars, alcohol and tobacco by the same amount on Wednesday.

Erdogan has repeatedly told Turks to exchange gold and hard currency into lira, saying the country was involved in an economic war.