Turkish lira falls after Erdoğan tells Biden position on S-400s unchanged

Turkey’s lira fell against the dollar after talks between President Recep Tayyip Erdoğan and U.S. President Joe Biden appeared to dash hopes that Turkey was prepared to relinquish S-400 air defence missiles purchased from Russia.

The lira fell 1.1 percent to 8.55 per dollar in Istanbul, adding to losses of 0.9 percent on Monday.

Speaking after the meeting at a NATO summit in Brussels, Erdoğan signalled that Turkey’s position had not changed on a political impasse that has led to U.S. sanctions on its defence industry.

“We expressed the same thoughts on S-400s to president (Biden) as we had before and also expressed the same thoughts about F-35s," Erdoğan said, according to Turkey’s state-run Anadolu news agency.

The United States has suspended Turkey from a programme to purchase F-35 stealth fighter jets and imposed sanctions on its defence procurement agency in retaliation for the acquisition of the missiles in 2019. Ankara has called on Washington to enter talks on an agreement that would allay U.S. fears that the missiles pose a threat to NATO’s defences and technology.

“It was a very fruitful and sincere meeting,” Erdoğan told reporters. Biden said the talks were productive and that he was confident the U.S. would “make real progress with Turkey”.

The United States and Turkey have also clashed diplomatically over a Turkish military incursion into northern Syria to battle Kurdish fighters allied with Washington in the battle against Islamic State (ISIS). Differences over Libya and a territorial dispute between Turkey and NATO member Greece in the eastern Mediterranean last year has added to the tensions.

The political disagreements have contributed to an exodus of foreign capital from Turkey and losses for the lira. The currency hit a record low of 8.88 per dollar at the start of this month. It had rallied over the past week as some investors bet that Biden and Erdoğan would make progress towards resolving the S-400 issue.

(This story was updated with lira price in the second paragraph.)