Turkish lira gains after Erdoğan strikes deal with U.S. on Syria
The Turkish lira advanced against the dollar on Friday after President Recep Tayyip Erdoğan agreed to pause an offensive against Kurdish forces in northern Syria.
The lira climbed 0.8 percent to 5.78 per dollar at 10:37 a.m. in Istanbul. Gains for the week totalled 1.8 percent, helped by dollar selling from state-run banks prior to the deal signed between Erdoğan and U.S. Vice President Mike Pence late on Thursday.
Turkey has agreed to cease all hostilities for five days as the United States oversees a withdrawal of the Kurdish-dominated Syrian Democratic Forces (SDF) from the border area with Turkey. The agreement allows for the establishment of a safe zone 20 miles (32 kilometres) deep just inside Syria. The Trump administration has also agreed to lift a set of economic sanctions against Ankara on Monday once a permanent ceasefire is agreed.
The main BIST 100 index of shares rose 3.4 percent to 98,132.59 points, led by banks. Halkbank, a state-run lender, increased 5.3 percent to 5.59 liras. Manhattan prosecutors issued an indictment against the bank on Tuesday on charges of breaking U.S. sanctions on Iran - a move widely seen as exerting further pressure on Turkey to end the incursion.
Erdoğan and Trump have both hailed the cessation of hostilities as a political victory. The United States had opposed a Turkish plan for a safe zone 30 kilometres deep prior to the military incursion, which began on Oct. 9 after Trump withdrew U.S. troops near the border. But Trump said on Thursday that the deal had saved “millions of lives”.
Trump is under political pressure in Washington following the agreement, with politicians on both sides of the house characterising it as a capitulation and unbefitting of U.S. foreign policy.
A bipartisan group of senators including Republican Senator Lindsey Graham said on Thursday they would move "full steam" ahead with legislation aimed at imposing tough new sanctions on Turkey despite the announcement of the ceasefire.