Turkey’s currency is being battered from all sides at the moment. In October 2017, the Lira fell sharply after both countries suspended bilateral visa processing in the latest US/Turkey diplomatic spat (although this was reversed in early November). Two weeks ago, it fell to a record low of 3.97 to the dollar, prompting the central bank to step in and cut borrowing limits for the banks. Last week we reported how the TRY was selling off on news flow from a trial in which a Turkish banker is accused by the US government of helping Iran to evade US sanctions via oil-for-gold deals. Turkey’s former economy minister, Zafer Caglayan, and two other banking executives have also been charged, albeit in absentia. In a document submitted to the court on 30 October 2017, federal prosecutors argued that evidence introduce at the trial will show that senior Turkish government officials and bankers ‘were integral to the sanctions evasion scheme’. There is a risk that the trial results in diplomatic penalties against Turkey and its banks and further sours US/Turkish relations.
This post was published at Zero Hedge on Dec 4, 2017.