Business World

Thursday 27 October 2016

Turkey moves to placate investors after failed coup

Gregory Viscusi, Constantine Courcoulas and Cagan Koc

Published 18/07/2016 | 02:30

Turkey’s President Recep Tayyip Erdogan. Photo: AP
Turkey’s President Recep Tayyip Erdogan. Photo: AP

The Turkish government moved swiftly to calm investors before financial markets reopened this morning after a failed coup, with the country's central bank promising unlimited liquidity to banks and its deputy prime minister reaching out to international investors.

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The central bank said in a statement that it would take all necessary steps to support Turkey's financial stability.

Deputy prime minister Mehmet Simsek said on his Twitter account that he had spoken to Central Bank governor Murat Cetinkaya and would hold a ­teleconference with international investors.

"We're on duty," Simsek said. "No need to worry. Turkey normalising rapidly after coup attempt repelled by nation. Our country's macroeconomic foundations are solid."

Turkey's lira plunged the most against the dollar in eight years on Friday as tanks rolled through the streets of Ankara and Istanbul, while warplanes and helicopters circled overhead. The lira fell as much as 4.6pc to about 3.0157 against the dollar as fund managers scattered for cover.

US Treasuries, a traditional safe-haven investment, were in demand, with yields on 10-year American debt sliding as investors sought shelter. Gold, another safe-haven that investors turn to in times of turmoil, also spiked as traders reacted to the headlines from Turkey.

While quashed within hours, the failed takeover threatens to destabilise an economy that depends heavily on capital inflows to finance its current-account deficit.

Turkey had already become less attractive to investors because of a wave of militant violence and the resurgence of government fighting with Kurdish separatists.

President Recep Tayyip Erdogan tightened his already formidable grip with a swift crackdown on opponents in the aftermath of the coup attempt, which left about 200 people dead. Justice Minister Bekir Bozdag said on Saturday that more than 6,000 people have been detained.

Irish Independent

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