Friday, December 3

Turkish lira rallied against dollar after falling to record lows

This enraged Erdogan, who threatened to expel them. However, diplomats “backed down” and “will be more prudent in the future,” said the Turkish president after a lengthy meeting of his government, in which apparently they warned him of the disastrous consequences that a new international crisis could bringl.

“Our intention was not to provoke a crisis but to protect our rights, our honor, our pride and our sovereign interests,” he stressed.

Most of the embassies concerned affirmed, in a message on Twitter, to act “in accordance with the Vienna Convention and its Article 41”, which frames diplomatic relations and prohibits any interference in the internal affairs of the host country, A statement that was “received positively” by the Turkish government.

It should be remembered that last week, the central bank cut interest rates from 18% to 16%, a measure that was dismissed as reckless by economists and legislators of the opposition. The reduction affected the Spanish bank BBVA, which has a subsidiary in Turkey. On Friday, the lira, which fell more than 20% so far this year, closed at 9.60.

“The central bank is clearly signaling that growth takes precedence over inflation,” said Brown Brothers Harriman’s Win Thin.

Erdogan hopes to meet with US President Joe Biden in Rome. Ankara’s relations with Washington are very cold, in particular over contracts to purchase F-35 fighter jets – already paid for but not delivered – and an order for spare parts for F-16s. Added to this is Turkey’s purchase of a Russian S-400 anti-aircraft defense system, despite being a member of NATO.

But for observers, it is mostly about “creating distraction” at a time when Turkey is going through a severe economic crisis, with an official inflation rate of the order of 20% and its currency in free fall.