Lira Tumbles After Erdogan Says Turkey Will Launch New Military Operation In Syria "In Days"

The Turkish Lira tumbled to session lows after President Recep Tayyip Erdoğan said that Turkey will start a new military operation in Syria east of the Euphrates river in northern Syria in a "few days". "It is time to realize our decision to wipe out terror groups east of the Euphrates," Erdogan said in a speech at the Turkish Defense Industry Summit held at the presidential complex in Ankara on Dec. 12.

"We will start the operation in east of the Euphrates in a few days to save it from the separatist terrorist organization," Erdoğan added, referring to the YPG. "Turkey's target is never the U.S. soldiers, but rather the members of the terror group."

Turkey has repeatedly threatened to attack Kurdish militants in the region, who are backed by the U.S. but viewed by Turkey as an extension of a terrorist organization, the PKK.

The Pentagon had announced on Dec. 11 that American observation posts in northern Syria, meant to prevent altercations between the Turkish army and US-supported YPG, have been erected, despite Ankara’s request to scrap the move. The Turkish army since 2016 has already launched two military operations in Syria, the last of which saw Ankara-backed Syrian rebels take the border city of Afrin from the YPG in March.

the United States has long been complained that tensions between Turkey and the SDF, of which the YPG is the backbone, have at times slowed down progress on fighting the ISIL.

In the same speech, Erdoğan also slammed the new US plan for 'protecting terrorists, not Turkey.'

"There is no Daesh threat in Syria any longer," Erdoğan said  accusing the U.S. of "delaying tactics" regarding its promise to clear the northeastern Syrian town of Manbij from YPG members.

"It is clear that the purpose of U.S. observation points in Syria is not to protect our country from terrorists but protect terrorists from Turkey," he noted.

Turkey has also been skeptical about a U.S. plan to train around 40,000 locals in northeastern Syria:“We do not see them as well-intentioned approaches," the ruling Justice and Development Party (AKP) spokesman Ömer Çelik said Dec. 11, referring to the reported U.S. plan. He added that the move will be seen by Turkey as "lending fresh support to terror elements in Syria."

U.S. Chairman of the Joint Chiefs of Staff Gen. Joseph Dunford had said on Dec. 7 that the U.S. needs to train and equip around 40,000 local fighters to "provide stability" in Syria.

Erdogan's words promptly sent the Turkish lira sliding 0.40% lower, making it today's worst performing EM currency, and sending it to one week lows amid fears the recent improvement in relations between Turkey and the US will be reversed as Erdogan takes another round of unilateral action.