DUBAI – Turkish assets are sighing after tariffs threatened by President Donald Trump over Ankara's military offensive in Syria have turned out to be less severe than markets expected.
Turkey's lira rises Tuesday morning, trading on the back of a statement by Trump promising a 50% tariff on Turkish steel imports and halting trade talks between Ankara and Washington – sanctions analysts call "window dressing" ".
The dollar has dropped 1% against the pound for the session,
Tariff threats are simply "window dressing from Trump," said Timothy Ash, senior emerging market strategist at Bluebay Asset Management. "Minimum sanctions. Multiple persons. A trade deal that has dropped anyway. And steel tariffs of up to 50% ̵
"Probable relief in the Turkish markets – they could be much worse."
Syrian fighters, supported by Turkey, near the city of Tuhar, north of the northern city of Manbij, Syria, on October 14, 2019.
Aref Tamaoui | AFP | Getty Images
The pound was declared the world's worst performing currency in the second week of October as sanctions were imposed on Turkish assets. Trump threatens to "completely wipe out" Turkey's fragile economy due to President Offensive Recep Tayyip Erdogan's military offensive in northern Syria against US-backed Kurdish forces – an operation that essentially illuminated Trump with his shock message of withdrawing US troops from the area and handing over responsibility for dealing with other Islamic State fighters against the Turks.
"These appear to be relatively light sanctions – meant to appease Congress without severing Trump's ties with Erdogan," Charlie Robertston, chief global economist at Renaissance Capital, told CNBC.
Turkey extends attack on US-backed Kurds
The agreement between the two parties emerged after a telephone conversation between Trump and Erdogan, the contents of which are unknown to the public. Widespread bilateral criticism has followed Trump's message, described by many lawmakers and security officials as abandoning the region's Kurdish allies of America after losing heavy casualties helping the United States expel IP.
This prompted Trump to threaten Turkey with sanctions if the country went too far in attacking Kurdish forces. Ankara views Kurdish fighters as vital to the expulsion of IS from Syria, along with US forces, as terrorists and has openly stated its goal to crush its presence in northern Syria.
"The United States will aggressively use economic sanctions to target those who allow, facilitate and fund these heinous acts in Syria," Trump said in a statement Monday. "I am ready to completely destroy Turkey's economy if Turkish leaders continue on this dangerous and destructive path. "
Without foreign volatility, the pound earlier dropped 5% this month against the dollar over sanctions and lost 40% of its value against the dollar in 2018 due to conflicting domestic monetary policies and diplomatic boron and with the US destabilizing threats of sanctions on the mind
Turkey's offensive in Syria, marked by air strikes and shelling, is now on its seventh day amid reports of human rights atrocities The UN claims 130,000 people have already been displaced and Kurdish forces say more than 200 have been killed.Protur forces cut off the main road between eastern and western Kurdish territory, blocking the main highway to the Kurdish the city of Kobani where they are based -American troops.
Meanwhile, Republican and Democratic lawmakers last week announced sanctions on a bill for Turkey, which they say must have a majority with veto evidence if rejected by the president.
Of the less severe than expected tariff threats on Monday, Robertson said: "While this would be beneficial for Turkish assets, markets will remain nervous as they cannot be sure that it takes enough pressure from Trump. "