Turkey to 'continue taking steps' to save lira's value

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"We will implement a boycott against America's electronic goods", Erdogan told the conference.

The fallout has been sparked by a number of issues - including Turkey's detention of American pastor Andrew Brunson - while Ankara has demanded the extradition of a Turkish cleric who is blamed by Mr Erdogan for masterminding the failed 2016 coup against him. "If they have iPhones, there is Samsung on the other side, and we have our own Vestel here", he said, referring to the Turkish electronics company, whose shares rose five percent.

"We (also) have our Venus and Vestel", he said about homegrown Turkish electronics brands. While the decline accelerated last Friday after the Trump administration announced new tariffs on Turkey, the US denied responsibility for Turkey's economic state. He suggested Turks would buy local or Korean phones instead of US-made iPhones, though it was unclear how he meant to enforce the boycott. But "thanks to God, our economy is functioning like clockwork", he maintained. Over the past five years Turkey's growth has been virtually keeping pace with that of China and India but it is now displaying the classic signs of overheating: a large trade deficit, a construction boom and soaring debt. This difference between import and export of goods and services has been filled through external borrowing in foreign currency.

USA and global markets fell on Friday and Monday, reflecting concerns that Turkey's problems could spread. Here, road paint reads: "Slow down". Since April, the USA dollar has appreciated by about 8 per cent against its major trading partners. On Tuesday, one dollar was worth 7.2 lira. Share prices of major European and United States banks have fallen, given the risks that their outstanding loans to Turkey won't be repaid.

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It is an issue that has pre-occupied some of the global financial agencies, who have been concerned about the potential for an emerging market financial and economic crisis because of the divergence between conditions in the United States and developing economies.

"We will see that our Turkish lira will be even stronger", he added.

What impact could the drop in the lira have on consumers in Hong Kong and NY?

"The president has a great deal of frustration on the fact that Pastor Brunson has not been released as well as the fact that other USA citizens and employees of diplomatic facilities have not been released", White House Press Secretary Sarah Sanders told a briefing.

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The Turkish stock market has also fallen 17%, while government borrowing costs have risen to 18% a year. Indeed, the Dow Jones industrial average dropped only 125 points, or 0.5 per cent.

Investors are anxious not only about Turkey's souring relations with the United States, a longtime North Atlantic Treaty Organisation ally, but also Erdogan's economic policies and the country's high debt accumulated in foreign currencies. Erdogan's authoritarian hand has distanced the country from traditional Western allies and hit confidence.

He also emphasized that there was a plan in place for small to medium businesses, which he called the "real" economy. But, foreign investors are concerned that the central bank may not act because of political interference.

For the moment, these measures have succeeded in stabilising the lira just above the all-time low it posted early Monday. "Other emerging central banks will be more willing to tighten rates to break the back of inflation and stabilize their currencies".

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