Jan 08 2019

Turkish lira slides on renewed tensions with United States

Turkey’s lira slid after President Recep Tayyip Erdoğan slammed the United States for its support of Kurdish militants in Syria and refused to meet with a senior U.S. official.

The lira fell to as low as 5.5 per dollar and traded down 2.1 percent at 5.49 against the currency at 4:58 p.m. in Istanbul. The decline extended losses in January to 3.8 percent.

Erdoğan, speaking to his deputies at parliament, said U.S. National Security Advisor John Bolton had “made a big mistake” by saying U.S. troops won’t pull out of Syria until Turkey had agreed not to attack Kurdish forces allied with Washington in the battle against Islamic State (ISIS). Bolton made the comments in Israel, prior to arriving in Ankara for meetings with Turkish officials.

“YPG/PKK are terrorists," Erdoğan said, referring to the Kurdish groups. "Some say ‘Don’t touch them because they are Kurds.' This is unacceptable. Everyone can be a terrorist ...Their ethnicity doesn’t matter.”

Erdoğan said he had refused a request to meet with Bolton and repeated that Turkey planned to extend military operations in Syria to deal with the threat of terrorism.

Political tensions with the United States sent the lira to a record low of 7.22 per dollar in August as Turkey refused to release a U.S. pastor interned on terrorism charges. He was later released, helping the currency to rally. Financial volatility in the country, also brought about by concern over an overheating economy, has pushed inflation to more than 20 percent and led to a surge in interest rates. The economy is also contracting.

President Donald Trump announced the U.S. withdrawal from Syria last month after speaking to Erdoğan by telephone. Erdoğan had told him that Turkey would take over the fight against ISIS in northern Syria, which includes areas bordering Turkey where Kurdish militants are based.

Bolton met with Erdoğan’s advisor and spokesman Ibrahim Kalın for two hours on Tuesday. He had said at the weekend that Turkey should coordinate fully with the United States in any military action it undertakes in Syria.

Turkey says the People’s Protection Forces (YPG) and its political wing are terrorists aligned with the Kurdistan Workers’ Party (PKK). Turkey has fought a three-decade war against the PKK at the cost of about 40,000 lives, most of them Kurdish.

Kalın said on Wednesday that the U.S. withdrawal from Syria should be preceded by the disarming of Kurdish fighters of any U.S. weapons supplied to them.