Turkey lira slides again as US talks end without breakthrough

Turkey lira slides again as US talks end without breakthrough
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Istanbul: Turkey’s embattled lira on Thursday hit a new record low against the dollar as high-level talks seeking to slacken tensions between Ankara and Washington produced no apparent breakthrough between the two NATO allies.

The lira lost 2.0 percent to trade at 5.4 to the dollar and lost 2.2 percent against the euro to trade at 6.3, also a record low.

The latest punishment on markets came after a delegation led by Turkish Deputy Foreign Minister Sedat Onal failed to secure a deal with Washington on a number of issues including the detention of US pastor Andrew Brunson which has caused a crisis in ties.

The two NATO allies have imposed reciprocal sanctions on two ministers on both sides, including an asset freeze, in a row over Turkey’s imprisonment on terror charges for almost two years of Brunson, who runs a small church in the Aegean city of Izmir.

The tensions have hit hard the already battered Turkish lira, which has lost over 40 percent of its value this year.

Neither Turkish nor US officials commented on the result of the talks on Wednesday with the State Department saying only Onal and Deputy Secretary of State John Sullivan “discussed a range of bilateral matters including Pastor Brunson.”

But US media reports said Washington failed to secure assurances from Ankara to free the pastor, who currently remains under house arrest.

The Wall Street Journal, citing American officials, reported that US and Turkish officials were “unable to produce a breakthrough”, raising fears Washington could take tougher punitive actions unless the standoff is resolved.

Brunson was detained in October 2016 on charges of terror and espionage, and if convicted, could face a jail term of 35 years. US President Donald Trump has described his detention as a “total disgrace” and urged President Recep Tayyip Erdogan to free him.

London-based Capital Economics said in a note that Turkish markets fell after the talks in Washington, which meant “US sanctions are likely to remain in place or even tighten”.

It said it remained uncertain how the sanctions would develop but “Our best guess is that Turkey’s important strategic position means that cooler heads and common sense will ultimately prevail.”

The Turkish economy is showing signs of overheating, with the country running a large current account deficit that makes it heavily dependent on foreign capital inflows.

Agence France-Presse