Turkey’s lira crisis threatens to undermine global economy

Turkish minister hails Germany’s stance on US sanctions

"Can such a thing be accepted?"

He said Russian President Vladimir Putin and Erdogan had also discussed using national currencies in trade.

Relations between the two North Atlantic Treaty Organisation allies have plummeted in one of their worst crises in decades after the detention of United States pastor Andrew Brunson on terror-related charges, sending the Turkish lira into free fall against the dollar.

Terry Sandven, chief equity strategist at US Bank Wealth Management, said the dollar has strengthened because economic growth has picked up and other regions aren't doing as well.

While the economic penalties would probably do little to dent USA economic interests, Erdogan's threat shows that the standoff over the fate of an American pastor held in Turkey isn't going to end soon.

After the US imposed sanctions on two Turkish ministers and amid growing domestic pressure from businesses and banks to contain a currency crisis, Erdogan said he wouldn't back down in the face of the economic attack against his country.

Brunson has been detained under house arrest pending his trial.

Trump urged Erdogan on Twitter to free him, describing his continuing detention as "a total disgrace".

By size, Turkey is America's 32nd-largest trading partner, and USA banks have little invested in Turkey, making up less than one percent of all foreign lending.

Unfazed by Turkey's escalating economic turmoil, Erdoğan suggested he would snub US-made iPhones in favour of other mobile brands produced domestically or in other countries.

Erdogan insisted Monday that the dynamics of the Turkish economy were "solid, strong and sound and will continue to be so". Mr Erdogan, who has presided over soaring inflation and borrowing levels, said the lira's fall was the result of a plot rather than prevailing economic conditions. "With God's permission we will overcome this".

"What is the reason for all this storm in a tea cup?"

Tourists count their Turkish liras after exchanging foreign currency at a exchange shop in Istanbul, Aug. 13, 2018.

The currency tumbled to a record low of around 7.20 lira against the dollar late on Sunday after Erdogan warned of drastic measures if businesses withdraw foreign currency from banks.

"I don't believe it's all over", said Minh Trang, senior currency trader at Silicon Valley Bank in Santa Clara, California. "Do not take a stance saying, "We are bankrupt, we are done, we should guarantee ourselves.' If you do that, that would be wrong. You should know that to keep this nation standing is. also the manufacturers' duty", he said".

Erdogan signaled he was not looking to offer concessions to the United States or financial markets.

The U.S. and China comprise Apple's two biggest markets, so this would be a much bigger deal - for both Apple and America - if this electronics ban came from China. "Some close the doors and some others open new ones", he said.

"Politicians who act in good faith and advocate diplomacy, will strengthen the Turkish people's confidence in our relations with Germany and the European Union", he added.

"In a worst- case scenario involving total loss of local equity and any intergroup funding, we see a range of circa one-12 per cent of group equity losses for these banks", it said in a note. Mr Brunson, who faces up to 35 years in jail if found guilty, denies the charges.

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