Turkish lira slides over doable US sanctions after S-400 supply

ISTANBUL: The Turkish lira was 1.3% weaker in opposition to the greenback on Friday over US sanction worries, after Russia delivered S-400 air defence missile system components to Turkey.

The primary components of the S-400 air defence system have been flown to a army air base close to the capital Ankara, a transfer anticipated to set off US sanctions in opposition to a NATO ally and drive a wedge into the center of the Western army alliance.

At 1450 GMT, the lira stood at 5.76 in opposition to the US forex, having weakened so far as 5.7780 earlier.

Cristian Maggio, head of rising markets technique at TD Securities, stated markets had barely begun to react to the S-400 supply and that US sanctions dangers shouldn’t be underestimated.

“They may have penalties for geopolitics and a non-negligible danger for the Turkish financial system, which is already in unhealthy form,” Maggio stated.

The US says the Russian army {hardware} shouldn’t be suitable with NATO methods and that the acquisition could result in Ankara’s expulsion from an F-35 fighter jet programme, by which Turkey is a producing associate.

Concern over a contemporary bout of sanctions additionally noticed Turkey’s dollar-denominated sovereign bonds tumble sharply and the value of insuring publicity to authorities debt spike.

Longer-dated maturities took the largest hit, with 2038  and 2040 bonds shedding round 2 cents, based on Tradeweb knowledge.

The principle BIST 100 index fell 2.35% whereas the banking index was down greater than 3.3% at 1450 GMT.


Copyright Reuters, 2019

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