Turkish court rejects USA pastor Andrew Brunson's appeal

Dwayne Harmon
August 16, 2018

The row with Washington has helped to drive the lira to record lows, with the currency losing more than 40 per cent of its value against the dollar this year, prompting central bank liquidity moves to support it.

US President Donald Trump authorised increased tariffs against Turkey on Friday in response to Turkey's unwillingness to release an American evangelical pastor, Andrew Brunson. The decree also doubled tariffs on American cosmetics, rice, and coal, among other imports.

Kevin Hassett, chairman of the White House Council of Economic Advisers, noted on Monday that those tariffs involve only a "tiny, tiny fraction" of Turkey's gross domestic product.

Most dramatically, a White House official told Reuters, "The president is 100 percent committed to bringing Pastor Brunson home, and if we do not see actions in the next few days or a week, there could be further actions taken".

On July 26, US Vice President Pence called on Turkish President Erdogan to release Brunson or face significant sanctions.

There was a clear, sharp drop in the lira's value on Friday after Trump tweeted he was doubling tariffs on Turkish steel and aluminum, citing a national security threat, and a smaller decline when the US sanctioned Turkey's Interior and Justice Ministers on August 1.

Earlier this month, Erdogan ordered the assets of two USA officials frozen in retaliation for sanctions imposed on Turkey's justice and interior ministers over the United States pastor's detention. Brunson is accused of backing a 2016 coup attempt against Erdogan, which Brunson denies.

Lavrov held talks in Ankara with Turkish Foreign Minister Mevlut Cavusoglu days after the Turkish lira TRY= plummeted to an all-time low versus the U.S. dollar, while the Russian rouble RUB= lost almost 10 percent in just several days of August.

While the lira climbed 5.3 per cent to 6.0294 per dollar by 7:06 p.m.in Istanbul, it's still down 18 per cent this month.

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Turkey's business lobbies called on Tuesday for a tighter monetary policy to stabilise the lira, and for diplomacy to solve U.S. "We will protect our Turkish lira , we will march with Turkish lira and we will see a stronger lira in the coming period".

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Also helping was Turkey's decision to release two Greek soldiers from prison on Tuesday, increasing prospects for improved relations with the European Union. Cavusoglu said ties with the bloc, which have been strained in recent years, were on a firmer basis and had started normalising.

It was also helped by a step from the banking watchdog BDDK, cutting the limit for Turkish banks' forex swap, spot and forward transactions with foreign banks to 25 per cent of a bank's equity. That fueled a relatively high rate of economic growth-7 percent past year.

"They are squeezing lira liquidity out of the system now and pushing interest rates higher", said Cristian Maggio, head of emerging markets strategy at TD Securities.

About 8 a.m. BST (3 a.m. ET), the lira made a rapid and large upward movement against the dollar, briefly moving back below six to the dollar and reversing some of the big downwards moves seen over the past week.

Russia backs using national currencies, not the United States dollar, in its trade with Turkey, Russian Foreign Minister Sergei Lavrov said on Tuesday, but he made no firm commitments that would immediately help Ankara to weather its currency crisis.

Washington said the move was inadequate.

There was no resolution to the Brunson case in sight.

The visit came hours after Brunson's lawyer appealed to a court for his release and for a travel ban against him to be lifted.

U.S. and Turkish officials held talks in Washington in a bid to resolve the crisis over the detained pastor, but the discussions concluded without any obvious progress.

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