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Jan 14 2019

Lira slides after Trump threatens Turkey’s economy

The Turkish lira slid against the dollar after U.S. President Donald Trump warned Turkey of economic devastation should it attack Kurdish fighters across the border in Syria.

The lira dropped 1.5 percent to 5.53 per dollar at 10:45 a.m. in Istanbul. The main BIST-100 share index declined 1 percent to 90,817 points.

“Starting the long overdue pull-out from Syria while hitting the little remaining ISIS territorial caliphate hard, and from many directions,” Trump said late on Sunday in comments on Twitter. “Will devastate Turkey economically if they hit Kurds. Create 20 mile safe zone....”

Political tensions with the United States last year over a Turkish invasion of Syria’s Afrin city and Turkey’s imprisonment of a U.S. pastor, which resulted in economic sanctions, helped send the lira into a nose-dive. The currency hit a record low of 7.22 per dollar in August. It lost almost a third of its value by December and the decline has continued this year.

Trump announced an immediate U.S. withdrawal from Syria last month after Turkish President Recep Tayyip Erdoğan told him by telephone that Turkey could take over the fight against Islamic State (ISIS). But Trump has since signalled that the United States will keep troops in the country so long as the threat from ISIS remains.

Erdoğan has ratcheted up tensions with Washington by threatening a full-scale invasion to tackle Kurdish militia. Turkey says the Kurdish People’s Protection Forces (YPG), which is allied with the United States in fighting ISIS, and its political wing are terrorists aligned with the Kurdistan Workers’ Party (PKK). Ankara has fought a three-decade war against the PKK at the cost of about 40,000 lives, most of them Kurdish.

Last week, Erdoğan refused to meet with U.S. National Security Advisor John Bolton during his visit to Ankara. Instead, Bolton met with Erdoğan’s advisor and spokesman Ibrahim Kalın. Bolton said Turkey should coordinate fully with the United States on any military action it was planning.

“Terrorists can’t be your partners & allies,” Kalın said on Monday. “Turkey expects the U.S. to honour our strategic partnership and doesn’t want it to be shadowed by terrorist propaganda.”

The Kurds have taken control of large swathes of northern Syria during the country’s civil war. The YPG are headquartered in the province of Manbij, where U.S. forces are also based.

The PKK is recognised as a terrorist organisation by the United States and the European Union.