Erdogan says Turkey will boycott United States electronics

People check currency exchange rates at a currency exchange office

People check currency exchange rates at a currency exchange office

Turkish president Recep Tayyip Erdogan's popularity is closely tied to the country's economic prosperity.

The diplomatic dispute has sent shockwaves through financial markets across the world as the plunging lira causing currencies in other developing countries to nosedive.

The lira plunged to a fresh record low of 7.24 against the dollar during in Asia Pacific trade, where markets were opening for Monday morning.

Erdogan said rumours had been spread that Turkey would establish capital controls following the decline of the lira, which fell 18% on Friday alone.

He also said the government had no plans to seize foreign currency deposits or convert deposits to the Turkish lira. "We will protect our economic independence by being tight-knit together", he told members of his AK Party in a speech.

"We (also) have our Venus and Vestel", he said about homegrown Turkish electronics brands.

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In its first statement since what was dubbed "Black Friday" in Turkey, the nation's central bank said today that it was ready to take "all necessary measures" to ensure financial stability, promising to provide banks with "all the liquidity" they need.

But the lira has dramatically tumbled since last Friday after the U.S. imposed sanctions and additional tariffs to force Turkey to release Pastor Andrew Brunson, who is a USA citizen detained in Turkey on flimsy terrorist charges.

Erdoğan's ideological resistance to raising interest rates in a time of high inflation, and general mismanagement of the economy, have exacerbated the crisis, leading to fears that the lira could collapse and take much of Europe with it. But most of those reports are done, and Sandven, of US Bank, said stocks may spend the next two months wavering.

More than a third of Turkish banks' lending is in foreign currencies, according to Reuters.

Onshore Chinese yuan CNY=CFXS, which had retreated roughly 0.7 percent the previous day, falling along with its emerging market peers, was a shade firmer at 6.8851 per dollar.

With inflation expected to run above 20%, a current account deficit that continues to widen, bond yields trading at record highs and growing political tensions with the USA, the Turkish administration have limited choices to stop the Lira from bleeding.

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Turkey's economy has been under punitive sanctions from the United States over the ongoing detention of a U.S. pastor, Andrew Brunson.

Trump and Erdoğan hammered out a deal for the USA to get Israel to release a Turkish woman imprisoned for alleged links to Hamas, and for Turkey to release detained United States pastor Andrew Brunson - or so Trump thought, sources tell The Guardian.

Trump met Turkish President Tayyip Erdoğan at a July NATO summit, and reportedly cut a deal on prisoner releases.

"When they fail to make us what they want on the field, they don't hesitate to use the economy as a weapon, just like diplomacy, just like military power, just like social and political instability", Erdoğan said.

"I believe that would help to facilitate a solution, including to the economic problems", Maas said.

Following Monday's meeting between Bolton and Turkish ambassador Serdar Kilic, U.S. officials have given no indication that the United States has been prepared to give ground in the standoff between the two countries' leaders.

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Actress Ebru Özkan was released the next day, while the pastor was moved from prison to house arrest.

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