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Turkish Lira Plunges To Record Low As Coalition Talks Break Down
It appears efforts to form a coalition has failed as local news report both the AKP and CHP will make separate statements from their party HQs.
Of course this shouldn't come as a surprise. President Recep Tayyip Erdogan has been accused of undermining the coalition building efforts in order to ensure that new elections are held later this year. AKP lost its absolute majority in parliament for the first time in 12 years in June and Erdogan is keen on winning it back in snap elections. The idea is that the renewed violence between Ankara and the PKK will turn voters against HDP, giving AKP the estimated 2% swing they need to restablish their majority. At that point, Erdogan would move to consolidate his power. On Wednesday, the President dryly noted that Davutoglu "would not commit suicide" if no coalition was formed.
As Bloomberg reports,
The governing AK Party’s executive body rejected a demand from the opposition Republican’s Peoples Party, or CHP, to establish a coalition that would last at least four years, Hurriyet newspaper reported Thursday, without saying how it got the information.
The political impasse more than two months after an inconclusive general election in June has damped investor perceptions of the $800 billion economy, along with mounting security risks and prospects for higher U.S. interest rates.
Prime Minister Ahmet Davutoglu and the leader of the CHP are due to say whether they have enough common ground to form a government after a meeting in Ankara that start at 2 p.m. local time.
“No coalition from the AKP-CHP meeting this afternoon is being priced in,” Isik Okte, a strategist at Teb Investment in Istanbul, wrote in an e-mailed note. “If there’s no coaliton, we might see levels of 75,300” on the Borsa Istanbul, he said.
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#BREAKING Reuters reports senior #CHP official says coalition talks with ruling Ak Party ends negatively #Turkey pic.twitter.com/xjPAjOegzy
— CNN Türk ENG (@CNNTURK_ENG) August 13, 2015
And Barclays has more on the intersection of war, politics, and financial conditions in Turkey:
Heightened geopolitical risk arising from the terror attack in Suruc is no accompanied by rising domestic risks from the renewed terror attacks by the PKK. These have inflamed political rhetoric and already tense coalition talks between the AKP and CHP, raising significantly the risks of a snap election and political instability. It remains to be seen whether the heightened tension will push the AKP and CHP further apart or bring together the AKP and MHP.
Escalating security risks may work in favour of the AKP in a snap election: The argument is that the perception of rising internal and external threats (PKK and ISIS) could increase the electorate’s preference for strong leadership and hence a singleparty government. It is also possible that AKP may attract some votes from MHP as a result of adopting a tougher stance against PKK (including the use of military force), ramping up the rhetoric against HDP and abandoning the Kurdish peace process.
Risk of HDP remaining below 10% is low for now: We do not see a significant likelihood that the HDP would score below the 10% national threshold in the event of a snap election, barring possible turbulence in the party caused by a potential ban on prominent politicians or party closure. The migration of votes from AKP to HDP appears to be a structural shift and unlikely to reverse in the near term, considering AKP’s increasingly nationalistic rhetoric and its stance on the Kurds in Syria.
Economic implications of recent developments are negative: We think: 1) the risks to the sovereign rating outlook have risen; 2) downside risks to growth are higher; 3) the perception of higher rising political/geopolitical risks could increase dollarization; and 4) corporate sector’s FX mismatches will be exposed.
Risks to the sovereign rating outlook have increased: Turkey’s gross external financing requirement remains large at c.USD200bn (or 25% of GDP), regardless of the improvement in the current account deficit. Needless to say, any rollover of this debt and/or the extent of re-pricing not only depend on global financial conditions but also investors’ perceptions of Turkey-specific risks. This naturally ties into the sovereign ratings outlook and associated risks to Turkey’s IG status, which moved back into focus during the election. The rating outlook revolves around whether political risks, policy uncertainties and government effectiveness could discourage capital inflows, thereby exposing Turkey’s external vulnerabilities. Rating agency commentary has generally been negative since the elections, highlighting rising political uncertainty and likely delay in structural reforms.
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Geez, if I didn't know any better, I'd wonder about the wisdom of holding fiat currencies in the current climate.
currency war at it's best
wow talking about the timing
get ready for Sept or Oct with a pope visit and a collapse BITCHEZ
The fact that U.S. funded ISIS is knocking at Turkey's door also may have some effect on Turkey's currency plunging in value. You know, the need for flight capital, dollars or euros, not liras.
Turkey owns ISIS. The latter is no threat to the former. In fact, the latter's "caliphate" dreams are entirely about reestablishing the oil-rich bits of the Ottoman Empire the European powers stripped from the Turks after WW1.
Nothing likes the old world like old money.
THe rumour mill says that the Republican Party leader has just banged the AKP's lady secretary. "She showed him a four year pass to her thicket" He said : I buy it!
That did not go down well with Erdogan. Coalition does not mean capitulation on the divan !
He wants immediate retribution: head and the tell-tale tail must roll!
The tennis crowd is watching this very closely as there is a similar situation in the Roger's Cup.
History rhymes from Toronto to Istanbul.
Turkey will be a failed state soon enough if not already. That's blowback for an undeclared war with Syria and for training and arming ISIS. Karma is a bitch
The following examples show the extent of Turkish involvement in the war on Syria:
–Turkey hosts the Political and Military Headquarters of the armed opposition. Most of the political leaders are former Syrians who have not lived there for decades.
–Turkey provides home base for armed opposition leaders. As quoted in the Vice News video “Syria: Wolves of the Valley”: “Most of the commanders actually live in Turkey and commute in to the fighting when necessary.”
–Turkey’s intelligence agency MIT has provided its own trucks for shipping huge quantities of weapons and ammunition to Syrian armed opposition groups. According to court testimony, they made at least 2,000 trips to Syria.
–Turkey is suspected of supplying the chemical weapons used in Ghouta in August 2013 as reported by Seymour Hersh here. In May 2013, Nusra fighters were arrested in possession of sarin but quickly and quietly released by Turkish authorities.
–Turkey’s foreign minister, top spy chief and senior military official were secretly recorded plotting an incident to justify Turkish military strikes against Syria. A sensational recording of the meeting was publicized, exposing the plot in advance and likely preventing it from proceeding.
–Turkey has provided direct aid and support to attacking insurgents. When insurgents attacked Kassab Syria on the border in spring 2014, Turkey provided backup military support and ambulances for injured fighters. Turkey shot down a Syrian jet fighter that was attacking the invading insurgents. The plane landed 7 kilometers inside Syrian territory, suggesting that Turkish claims it was in Turkish air space are likely untrue.
–Turkey has recently increased its coordination with Saudi Arabia and Qatar.
more at:
https://consortiumnews.com/2015/06/25/turkeys-troubling-war-on-syria/
Nobody cares the state of the empire over which they rule, so long as they rule over it absolutely.
Simply not true, the hard line peasents refused to be reformed even though it's for their own good.
Turkey is soooo lucky. a drop in their currency is great news for them, their economy and their "markets. Since the goal is inflation no matter what, the Fed is watching to see if it can replicate their "success".
They can always look to their friends and allies, Greece, for aid, support and direction.
Saved by the bells! Ding-a-fucking-ling, Bitchez
Erdogan is Ataturk redux. The Americans have got his back at Icirclik so a lot more Kurd Sturm und Drang and a snap election with an AKP majority will finally establish the Erdophate and then it's rock 'n roll.
Off the radar, the Turks are flooding the Greek islands nearest the Turkish littoral with Syrian and Iraqi refugees who just happened to bring their rubber dinghies with them to paddle across.
When things on the islands become sufficiently anarchic then it's tear up the 1923 agreement and invade. What's a million-man Turk army for if you don't use it?
I love this guy!
He's not Ataturk redux, he's the second coming of Osman the first.
Erdogan fancies himself the Fifth Imam, and plans to restore the Caliphate. I predict they will send peace keepers to Syria when Assad falls, and then into Western Iraq....
the failed greek economic situation would spread to turkey. they are close to each other.
Methinks the Kurds are actively working to avoid being the next Armenians. Something about basic survival is a rather strong motivator, non?
It looks to me as if US aircraft and personnel provided toTurkey on the pretext of assualting Isis, are in fact being used for Turkeys ongoing repression of the Kurdish separtists. I hope there was a fly on the wall when that deal was worked out.
We have done a hellof a job in the ME. Maybe universal chaos and mayhem, misery and death were our real aim.