Turkish lira drops in volatile week after Syria incursion

Turkey’s lira fell against the dollar on Friday, nearing the end of a volatile week in which President Recep Tayyip Erdoğan sanctioned a military incursion into northern Syria.

The lira dropped by 0.7 percent to 5.88 per dollar, taking losses since Monday to almost 3 percent. The currency, pummelled by a currency crisis in 2018, is down 10 percent this year.

Global opposition to Turkey’s latest military operation in Syria is mounting as troops, backed by allied fighters, artillery and planes, attacked the positions of Kurdish militants in an operation that began on Wednesday. President Donald Trump, who reportedly gave Erdoğan permission to invade at the weekend, is retreating from that position and has threatened economic sanctions should Turkey “step over the line”.

State Department officials said late on Thursday that Trump gave Turkey a “very clear red light” against unilateral action. Turkey says it is upholding rights afforded by international law to defend its borders against terrorism. Militants of the Kurdish People’s Protection Units (YPG) have provided the main fighting force in the U.S.-led battle against Islamic State (ISIS) in Syria, but are aligned with the Kurdistan Workers’ Party (PKK), an autonomy-seeking group in Turkey labelled as terrorists by the United States and the European Union.

NATO Secretary General Jens Stoltenberg told Turkish Foreign Minister Mevlüt Çavuşoğlu in Istanbul on Friday that Turkey had the right to defend itself, but he had “serious concerns about the operation and the risk of further destabilising the region, escalating tensions and even more human suffering”.

Trump enacted sanctions against Turkey in August last year for its detention of a U.S. pastor on terrorism charges. The measures helped spark the currency crisis.

French Secretary of State for European Affairs Amelie de Montchalin said the European Union would discuss possible sanctions on Turkey in an EU summit scheduled for next week, BBC Turkish reported.

“We cannot wait helplessly when we are facing a shocking situation for civilians, free Syrian forces and the stability of the region,” de Montchalin said in a radio programme when asked about Turkish offensive in northern Syria.

“The issue of sanctions will be discussed in the European Council. Plainly speaking, sanctions are on the table,” BBC Turkish quoted the minister as saying.

Turkey’s main BIST-100 share index rose 0.2 percent to 98.972,43 points on Friday, clawing back part of the week’s losses. The index had traded at almost 105,000 points on Monday.