Turkish, French finance ministers agree on cooperation amid USA sanctions

Kenny Grant
August 18, 2018

U.S. and European stocks wobbled today on investor concerns over Turkey and the ongoing trade war between China and the United States.

The unnamed source added that they had agreed that their finance ministers - Berat Albayrak and Bruno Le Maire - would meet "as soon as possible", and that Mr Macron had told Mr Erdogan that Turkey's economic stability was "important" for France.

In a statement, the ministry also said it would provide flexibility on maturities and pricing to endure cash flow for companies, while taking additional measures to avoid obstacles against borrowing for companies. "Similarly, there has been no improvement in relations with the U.S. and additional sanctions may be on the horizon".

On the first day Trump threatened Turkey with sanctions for the treatment of Brunson, Vice President Mike Pence gave a prayer at the Ministerial to Advance Religious Freedom in which he said "to believers across America, I say a pray for pastor Brunson".

Trump, before leaving the White House on Friday, denounced Turkey as a "problem for a long time" and said it made up a "phony" spying charge against Andrew Brunson.

Turkey's lira, meanwhile, dropped nearly 3 per cent to almost 6 per dollar again, having recovered ground rapidly in recent days.

US President Donald Trump attacked Turkey on Friday, saying the North Atlantic Treaty Organisation ally is not a friend and had made up espionage charges against an American pastor detained in the country.

Treasury Secretary Steven Mnuchin on Thursday evening said that the U.S. could look to impose fresh sanctions on Turkey if President Erdogan doesn't release imprisoned American pastor Andrew Brunson.

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Turkey's central bank meets next on September 13.

The prospect of the United States and China returning to the table instead of trading tariff increases brought some relief to investors.

Despite its economic woes, Turkey did this week find support from friendly Qatar, which promised to make a US$15 billion direct investment in the country.

Their weakness stemmed also from falls in their currencies after the Turkish lira plunged this month on concerns about diplomatic rifts between Ankara and Washington.

Washington and Ankara have been at loggerheads over the release of pastor Brunson who is held in Turkey. For companies, the cost of servicing foreign debt has risen by a quarter in lira terms in the past two months.

Turkey's currency remains steady against the dollar despite an apparent threat of possible new sanctions by U.S. President Donald Trump.

Turkish markets will be closed from midday on Monday for the rest of the week for Eid Al Adha. It estimates Turkey's short-term external debt at $180 billion and total external debt at $460 billion - the highest in emerging markets. Erdogan has remained defiant, urging Turks to sell their gold and dollars for lira.

Despite that, foreign currency deposits held by local investors rose to $159.9 billion in the week to August 10, from $158.6 billion a week earlier, central bank data showed on Thursday.

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