Turkey

Turkish Airlines Chairman Ilker Ayci is evaluating potential investments in other airlines to help safeguard expansion if the rise in protectionism presents hurdles to growth, Bloomberg News reported. The carrier, which offers more destinations than any other, is examining prospects in a range of markets, including India, China and the U.S., Ayci said in an interview at the Paris Air Show. “We’ve expanded through organic growth so far, but protectionist policies are rising,” he said. “So we’re exploring cross-airline relationships -- equity or non-equity.

Turkey’s government plans to restructure nearly $20 billion in unpaid taxes, the second such move in a year, as it seeks to boost revenue and stimulate growth, Bloomberg News reported. A bill sent to parliament on Tuesday would allow taxpayers to repay existing debt to state institutions over a period of three years starting July, and receive discounts for paying upfront, Finance Minister Naci Agbal said in an interview with Bloomberg HT television in Ankara on Wednesday. The amount covered by the measure is at least 73 billion liras, Agbal said.

The central bank opted to leave its benchmark interest rate on hold on Tuesday, stunning economists who had predicted a rise of anywhere between a quarter and a full percentage point, and sending the lira plunging, albeit briefly, the Financial Times reported. The central bank did not stand still entirely, raising the overnight lending rate by 0.75 percentage points and pledging more tightening in future if “inflation expectations, pricing behaviour and other factors affecting inflation” warrant it.

The Turkish central bank failed to stop the lira’s free fall with its limited step to boost liquidity in financial markets, amid political pressure to keep interest rates low, The Wall Street Journal reported. The Turkish currency tumbled as much as 1.9% during trading in Istanbul on Tuesday, its fourth straight record low. Instead of touching interest rates, the central bank loosened foreign-currency reserve requirements by half of a percentage point, saying the measure would inject about $1.5 billion of liquidity into financial markets.

Turkey’s economy contracted for the first time in seven years during the third quarter, official data showed on Monday, as mounting uncertainties since a failed summer coup crimped domestic demand and devastated key industries like tourism. Gross domestic product in July through September shrunk by 1.8% annually, sinking deeper into negative territory than a 0.4% drop forecast by 10 economists in a Wall Street Journal survey and reversing Turkey’s resilient growth record since its latest decline in the third quarter of 2009.

Turkish Prime Minister Binali Yildirim announced Thursday the creation of a $72 billion fund for local businesses, part of a spate of new government measures aimed at supporting the country’s economy and slumping currency, The Wall Street Journal reported. Turkey’s currency, the lira, has dropped 18% against the dollar this year and has traded at historical lows since early November. This has happened against the backdrop of the political uncertainty following a failed coup in mid-July and the imposition of a state of emergency.

After July’s attempted coup, Turkish ministers, officials and trade bodies have been scrambling to show that the world’s 17th largest economy is on a sound footing by meeting investors, advertising in western media including the Financial Times, and announcing a slew of measures aimed at building confidence. They are anxious to reassure markets and investors and, crucially the rating agencies, after Moody’s warned it could downgrade Turkey’s sovereign debt rating to junk status.

Turkey’s failed coup is dealing yet another blow to the nation’s banks, which are already under pressure from rising bad debts and a slump in tourism, Bloomberg News reported yesterday. Istanbul-based lenders Yapi ve Kredi Bankasi AS and Sekerbank TAS canceled about $800 million of debt sales this week after the attempt to unseat President Recep Tayyip Erdogan and the ensuing political unrest spooked investors. Neither bank forecast when it may return to the credit markets, with Sekerbank saying it would contact fixed-income investors in due course.

Turkey’s central bank today cut one of its key rates for the fifth consecutive month after an attempted coup triggered fears about repercussions for the country’s economy, the Wall Street Journal reported. The Monetary Policy Committee in Ankara said it cut the overnight lending rate to 8.75 percent from 9 percent. It kept its benchmark one-week repo rate steady at 7.5 percent and its overnight borrowing rate at 7.25 percent. After the decision, Turkey’s lira extended its losses, trading 0.1 percent lower at 2.9847 per dollar, compared with 2.9713 before the announcement.

Turkey needs “a new growth model, a new story. Growth based on hot money flows is over.” Those are the words of Cemil Ertem, chief adviser to Recep Tayyip Erdogan, Turkey’s president, in a television interview on June 9, the Financial Times reported. Mr Ertem is one of many government figures who have castigated Turkey’s central bank for not lowering interest rates quickly enough, and who see foreign portfolio investors and an ill-defined “interest rate lobby” as the enemies of Turkish prosperity.