Turkish lira rebounds after Qatar pledges $15 billion

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. Ismail Ferdous  Bloomberg

The euro, which has been affected by concerns about European banks' exposure to Turkey, traded at Dollars 1.1375, off 13-1/2-month low of USD 1.1301 on Wednesday. -China trade talks offset by an end-of-week wobble in emerging markets as the Turkish lira's recovery ran out of steam.

On August 13, 2018, cryptocurrency trading surged in Turkey due to the recent plummet in the price of the Lira.

What should have had anyone watching the debacle banging their heads against the nearest wall was that the Turkish policy response seemed to be to, well, do nothing - except blame a mysterious global financial cabal for a crisis of Turkey's own making.

However, the central bank has defied calls from markets for rate hikes, raising concerns of interference from Mr Erdogan who is on record as describing himself as an "enemy" of higher interest rates.

Speaking in Washington, White House spokeswoman Sarah Sanders made clear the United States had no plan to remove the steel tariffs if Brunson were released though she said it could remove sanctions imposed on two senior Turkish officials.

Leaving aside the wisdom of launching a trade war with a North Atlantic Treaty Organisation ally over one man, the currency justification was - how to put it politely? - peculiar. The U.S. economy grew at its fastest pace in almost four years in the second quarter.

Mr Trump, who has doubled steel and aluminum tariffs on Turkey, said the steel tariffs had kicked in and the aluminium tariffs would take effect soon.

"Turkey has not done any wrong to the United States, not even once".

But then Wednesday came along, and the storm clouds seemed to recede.

Turkey is particularly friendly to the cryptocurrency ecosystem given that Turkish banks work with local exchanges.

The lira gained some support from the announcement late on Wednesday of a Qatari pledge to invest $US15 billion ($A21 billion) in Turkey.

More news: USA and China meet for trade talks

Turkey has increased tariffs on several US -origin products, including alcohol and tobacco products and cars, according to a new presidential decree published early Wednesday in the official gazette.

Yet the dollar was still up nearly 10% on the day at 7.00 lira.

Crisis averted - or has it just been deferred?

Among the big concerns is that Turkey's has amassed high levels of foreign debt to fuel growth in recent years. But there were costs. Instead, Brunson was placed under house arrest.

"The worst of the broader contagion fears is likely behind us, and we do not expect further knock-on effects from Turkish concerns for the major currencies or for global financial markets more broadly", said Erik Nelson, currency strategist at Wells Fargo Securities in NY.

Turkey's currency fell to a new record low today.

Any fall in the Turkish lira against the likes of the USA dollar and the euro accentuates that debt burden.

"They want to hold our wonderful pastor".

As monetary policy goes, that stance might not make much sense to anybody - except, that is, President Recap Erdogan.

Mr Erdogan has tightened his grip since consolidating power after general elections this year.

The initiative underscores the strong relations between Qatar and Turkey and re-emphasise Qatar's gratitude and appreciation for the stand taken by the government and people of Turkey in support of Doha when the unjust siege was imposed on it in June past year.

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