Jul 15 2019

Impact of U.S. sanctions on Turkey not as bad as firing central bank governor - Bloomberg

The effect of U.S. sanctions on Turkey for its purchase of Russian S-400 missiles is likely to be minimal, Bloomberg said.

Turkey received the first batch of S-400 air defence missiles on Friday and has received more shipments since. It risks being ejected from the manufacturing programme to build and operate F-35 stealth fighter jets and U.S. sanctions under the Countering America's Adversaries Through Sanctions Act (CAATSA).

“Near term, they would not affect perception of risk in Turkey as much (as) the lack of credibility in interest rate policy,” Bloomberg quoted Hasnain Malik, investment bank Tellimer's head of the equity strategy, as saying.

President Recep Tayyip Erdoğan sacked central bank governor Murat Çetinkaya this month for declining to obey the government’s repeated instructions to cut rates.

The decision sparked fears that Erdoğan's government was leading Turkey's economy toward a precipice. Unless the U.S. sanctions are surprisingly severe, investors will not respond as negatively as they did to the sacking of Çetinkaya, Malik said.

https://www.bloomberg.com/news/articles/2019-07-14/bets-u-s-sanctions-are-more-pinch-than-punch-may-curb-lira-pain