shine trader live reports:
Erdogan told supporters at an event in northeast Turkey on the 23rd that he had made “necessary instructions” to the foreign minister and listed the ambassadors of 10 western countries to Turkey as “unwelcome people”. He also said on the same day: “these ambassadors need to understand, understand and know Turkey. As long as they don’t understand and don’t understand Turkey, they must leave.”
The fuse for threatening to expel 10 foreign diplomats was the demand of these countries for the release of the detained Turkish businessman kawara.
Kawara, 64, is a famous human rights advocate and political dissident. Kawara was accused of participating in the organization of anti-government demonstrations in 2013 and attempted coup in 2016, and was detained after 2017.
Kawara was acquitted last year, but the ruling was overturned this year. At present, his trial is ongoing.
On October 18 local time, the embassies of the United States, Canada, Denmark, Finland, Germany, France, the Netherlands, New Zealand, Norway and Sweden in Turkey issued a joint statement criticizing the “continued delay” in the trial of kawara and “casting a shadow over the Turkish judicial system’s respect for democracy, the rule of law and transparency”. The statement called for a “fair and speedy” trial of kawara’s case and “urgent release” of him.
According to French news channel France24, analysts believe that Erdogan’s latest action may create the deepest and most lasting rift with western countries so far. This may also cast a shadow over the G20 meeting in Rome this weekend, at which Erdogan had hoped to discuss with US President Biden the purchase of a large number of us fighter jets.
However, Reuters believes that Erdogan may not have follow-up substantive action by reviewing the previous disputes between Turkey and European and American countries. In 2018, the United States announced that it had been imprisoned by Turkey for American priest brenson, and the United States decided to sanction the Turkish Minister of justice and the Minister of the interior. Subsequently, the United States announced that it would double the import tariffs on Turkish steel and aluminum products. At that time, Erdogan threatened that Turkey would boycott electronic products produced by the United States, but in fact, the sales of goods were not affected. Last year, Erdogan called on Turks to boycott French goods in response to macron’s “anti Islamic policy”, and the result was nothing.
The lira depreciated sharply
Erdogan’s latest remarks disturbed investors, and the Turkish Lira fell to a record low against the dollar. In fact, since Erdogan won the 2018 election, the lira has depreciated by 50% against the US dollar.
In the past two and a half years, he fired three central bank governors because of policy differences, which seriously damaged the credibility and predictability of the monetary policy of the Turkish central bank. Foreign investors continued to sell Turkish assets in recent years because of concerns about the independence of the central bank.
Two weeks ago, Erdogan dismissed three members of the central bank’s Monetary Policy Committee (MPC) and appointed two new members to replace them.
At present, Turkey’s inflation rate is as high as 20%. Erdogan believes that raising interest rates will lead to inflation and firmly believes that cutting interest rates can reduce inflation.
On September 23, the Central Bank of Turkey announced that the policy interest rate would be reduced by 1 percentage point. Recently, the Central Bank of Turkey once again announced that the policy interest rate would be reduced from 18% to 16%. The reduction rate was twice that expected by the market. This was the second time that the Central Bank of Turkey cut interest rate in a month, and the lira fell sharply against the US dollar.
Analysts pointed out that according to economic principles, usually in the case of high inflation and low foreign exchange reserves, interest rates should be raised to attract foreign investment, so as to make the country’s currency strong.
Piotr matys, senior monetary analyst at InTouch capital, believes that the Turkish central bank’s interest rate cut this time sends a strong signal to the outside world that “the central bank intends to relax monetary policy regardless of the negative consequences of the sharp decline in the value of lira”.
The devaluation of the Turkish Lira has also put pressure on the Turkish economy. Local media reported that although Turkey’s total economy is nominally growing every year, the growth rate can not catch up with the devaluation of the lira, and the country’s GDP is expected to fall out of the world’s top 20 this year.