US Treasury chief threatens more sanctions on Turkey if pastor not released

Fredrick Soto
August 17, 2018

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The U.S. dollar weakened against a basket of other major currencies as news that a Chinese delegation will travel to the United States for trade talks prompted investors to buy back into currencies hit hard in a selloff in recent days.The currency, which lagged many other "G10" currencies on Wednesday, traded in a range of C$1.3114 to C$1.3164.

The dispute is one of several between the North Atlantic Treaty Organisation allies, including diverging interests in Syria and USA objections to Ankara's ambition to buy Russian defence systems, that have contributed to instability in Turkish financial markets.

The Turkish lira has been hit by concerns over President Recep Tayyip Erdogan's economic policies and a trade and diplomatic dispute with the United States, a North Atlantic Treaty Organisation ally.

Despite the resilience of the dollar, market players are not too optimistic about the course of the US currency.

Elsewhere, the dollar dipped against a basket of currencies .DXY , moving further away from its highest levels since June 2017, hit earlier in the week as investors bought the USA currency in a flight to safety.

Despite the rise, Turkey's currency has lost nearly a third of its value against the dollar since January, pushing up the price of everyday items and raising fears that its weakness could infect other emerging market currencies.

Doubts about Turkey's future intensified as relations with the United States, a longtime North Atlantic Treaty Organisation ally, soured.

It touched a record low of 7.24 to the dollar early on Monday, rattling global stock markets and threatening the stability of Turkey's financial sector.

Washington has imposed financial sanctions on two Turkish ministers and doubled steel and aluminium tariffs on Turkey, as U.S. president Donald Trump tries to secure the release of Andrew Brunson, a 50-year-old American pastor being tried in Turkey on espionage and terrorism-related charges.

With Ankara locked in a furious row with the United States, he also played down a decision by President Donald Trump to double tariffs on imports of Turkish metals. He called Brunson "a great patriot hostage.".

Trump adds, "We will pay nothing for the release of an innocent man, but we are cutting back on Turkey!"

"They have not proven to be a good friend", Mr Trump said of Turkey during the Cabinet meeting.

The Trump administration says Turkey could face additional sanctions if an American pastor detained on espionage and terrorism-related charges isn't quickly released.

Brunson, 50, is being tried on espionage and terror-related charges, which he and the US government vehemently deny. Talks between Turkey and the United States are ongoing, however, and a breakthrough is still possible at this stage.

The Chinese yuan CNH=EBS gained 1.1 percent to 6.87 per dollar.

The high-level conversation comes as Turkey shows signs of a rapprochement with European countries amid an on-going trade and diplomatic spat with the United States that help trigger a Turkish currency crisis. Central bank data showed 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.

"Rates have gone up by 10 percent".

Measures to restrict the amount of currency that can be exchanged with foreign banks were also said to be boosting the currency.

The lira, still down 34% against the dollar this year, firmed to 5.7700 by 12pm Irish time from a close of 5.95.

Mr Erdogan has said Turkey is the target of an economic war, and has made repeated calls for Turks to sell their dollars and euros to shore up the national currency.

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 a year ago.

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