Rental Companies Brace for Turkish Foreign Currency Ban

Erdogan appoints himself chairman of Turkey's sovereign wealth fund

Erdogan appoints himself chairman of Turkey's sovereign wealth fund

Facing a deep slide in the lira and a steep run higher in inflation, the central bank felt compelled to lift rates to restore investor confidence-a risky gambit that boosted the lira but could further damage the economy.

Investors are mainly concerned about Erdogan's economic policies and an ongoing diplomatic and trade dispute with the United States over the detention of an American pastor on espionage and terror-related charges.

There may be exceptions decided by the treasury and finance ministry - headed since July by Erdogan's son-in-law and former energy minister, Berat Albayrak - the decree added.

"As a result, he has little credibility with Chinese policymakers", they said.

The European Central Bank and the Bank of England hold policy meetings on Thursday, but both are widely expected to leave interest rates unchanged, though the ECB could confirm when exactly it will end its stimulus programme.

In a statement, the central bank noted Thursday that the local economy is weakening and inflation is rising.

The Turkish Central Bank earlier signaled that its monetary policy would be adjusted in an effort to support the Turkish lira.

The lira reacted strongly to the decision, rising by five percent in value to 6.0 lira to the USA dollar.

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The Turkish currency lost almost a quarter in value against the greenback in August.

The lira's plunge amplifies heaps of worry spots for the Turkish financial system: as global ardour fee rise and the dollar strengthens, Turkey's worldwide replace-denominated debt - which amounts to 50 percent of its imperfect home product (GDP) - becomes increasingly painful to finance. Dollar-denominated bonds issued by the Turkish government rose across the curve. The bank increased the cost of cash to commercial lenders by around 150 basis points last month by forcing them to use a borrowing tool costlier than the one-week repo rate.

Erdogan previous year said the fund needed a "reorganisation" after the first chairman Mehmet Bostan was removed from his post in September 2017. -China trade stand-off and an interest rate hike in emerging market trouble-spot Turkey sent an index of global stocks higher on Thursday as risk appetite returned.

The surprise move buoyed markets that had been mired in a slump for months, triggered by a diplomatic row with the USA and then amplified by central bank inaction.

The bank's move is long overdue, many independent economists say, and suggests it is re-asserting its independence after President Recep Tayyip Erdogan repeatedly and publicly pushed it to keep rates low.

The central bank cut the reserve requirements for banks by 4 percentage points for foreign exchange liabilities over one, two and three years, and by 2.5 percentage points over other maturities. Such measures are largely believed to have led to a sharp decline in the value of Turkey's national currency.

Even if this is a step in the right direction, the crisis of lira is not over.

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