One casualty of Turkey's military incursion into Syria may be its own recov...
BEIRUT/ANKARA - One casualty of Turkey’s military incursion into Syria may be its own recovery from recession after U.S. congressional leaders threatened sanctions that could hit the lira and harden Turkish distrust of Western allies.
The central bank has slashed interest rates since July to kick-start lending. But by Thursday, market expectationsfor further policy easing were reined in as investors worried that fallout from the conflict could delay the recovery. Graham’s proposal would target the assets of Erdogan and other top officials, impose visa restrictions, and sanction anyone who conducted military transactions with Turkey or supported energy production.
“The more political pressure comes, the more Trump might be inclined to state that Turkish action might be off limits,” added Leuchtmann. A senior Turkish banker who requested anonymity said the weakness so far reflects immediate geopolitics surrounding the incursion rather than sanctions, which loom as “the biggest threat”.
Money market traders TRYAM3L3MF3M=now predict the central bank will cut rates to 15% by year-end, from 16.5% now, rather than the 13.5% they had predicted at the end of last week. Four traders said a 50- to 75-point cut is expected later this month.
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