Lira drops on Erdoğan threats over U.S. airbase, dismissed bankers
Turkey’s lira dropped to the lowest levels in almost two months on Monday after President Recep Tayyip Erdoğan said he may shutter a key U.S. military base in the country, ratcheting up tensions with Washington.
The lira fell 0.7 percent to 5.85 per dollar at 5:33 p.m. in Istanbul.
Erdoğan said on Sunday that Turkey could close down the Incirlik airbase, where the United States stations military aircraft, nuclear weapons and troops, should Washington carry out a threat to punish Turkey with economic sanctions for its purchase this year of Russian S-400 air defence missiles. A Senate committee approved the measures last week, which would need to be signed off by President Donald Trump.
The lira also fell after Bloomberg reported at the weekend that the banking regulator, overseen by Treasury and Finance Minister Berat Albayrak, Erdoğan’s son-in-law, had instructed non-government banks to dismiss eleven senior executives since late 2017. The regulator strongly refuted the allegations in a statement on Sunday, saying it reserved the right to take legal action for what is said were baseless claims.
Bloomberg, which cited the bankers anonymously, said that the Turkish authorities are extending their campaign against perceived political enemies to the $750-billion finance industry. The dismissals also allowed businessmen close to the government to access credit during the country’s recent economic troubles, one of the bankers said.
Foreign investors are concerned about government interference in financial markets, which they say has hurt the lira and local bonds. Albayrak has accused some unnamed critics of the government’s policies, which have focused on discounted loans and unorthodox ways to slow inflation, of seeking to destabilise Turkish markets, likening their actions to support for terrorist acts.