Turkish turmoil to send economic storm clouds over United States soon

Presidents Hassan Rouhani of Iran Recep Tayyip Erdogan of Turkey and Vladimir Putin of Russia pose before their meeting in Ankara earlier this year. Tolga Bozoglu  pool via Reuters

Turkey’s new debt problem

Still, the currency is down almost 40 percent this month, and Turkish President Recep Tayyip Erdoğan, who sees Turkey as under economic attack, has declared that the country will boycott American electronic goods, singling out iPhones as an example.

"We will boycott USA electronic goods", Erdogan said in a speech in Ankara, again showing no sign of compromise in the dispute.

'If (the United States) have the iPhone, there's Samsung on the other side, ' he said, referring to U.S. giant Apple's iconic phone and the top South Korean brand. What a boycott on iPhones (and potentially other Apple products) would mean for these locations isn't clear. But neither side has backed down, with Erdogan invoking Turkey's past of supporting the U.S. in times of need, including America's war in Afghanistan.

Turkish Airlines also announced on Twitter that it would join a campaign circulating on social media with a hashtag #ABDyeReklamVerme [don't give ads to America].

The lira firmed as far as 5.75 against the dollar on Wednesday and stood at 5.9350 at 0745 GMT in a move initially triggered by a Turkish court decision to release two Greek soldiers facing espionage charges.

That was a rare Trump understatement, as the two countries face sharp differences on the case of Brunson and other detained Americans, Erdogan's consolidation of power, USA support for Kurds in Syria, growing Turkish relations with Russia, Turkey's evasion of US sanctions and more.

The report says that ASUS has rushed to reduce risk, quickly selling off its local store of products in Turkey in exchange for us dollars. Turkey regards the Kurdish fighters as terrorists.

The lira recovered on Tuesday from near-record lows, helped by liquidity measures from the Turkish central bank.

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He noted that "defaults and hence a recession in Turkey are becoming increasingly likely", and "ditto for Argentina", which has seen its US -dollar debt surge to 18.4 per cent of GDP versus 6.7 per cent two years ago.

"We (also) have our Venus and Vestel", he said about homegrown Turkish electronics brands.

The president issued a rallying cry for unity to resist what he has described as an economic war waged by the US.

Reuters quoted an official as saying more economic pressures may be in store for Turkey unless steps are taken "in the next few days or a week".

Why is Erdogan mad at the United States?

After winning a June election, Erdogan spooked markets when he tightened his control over the central bank. The currency has now stabilized at around 6.50 lira against the dollar.

In April, Turkey and Iran issued the first letter of credit in the form of a national currency swap to exchange the Iranian rial and Turkish lira.

While Erdogan didn't address their concerns in his speeches on Tuesday, he suggested Turks have already begun responding to his call to convert foreign exchange into lira because it would be tantamount to "surrendering" if they did otherwise.

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