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Lira Crashes Through 5.00 As US Sanctions Hit 2 Turkish Govt Officials

Courtesy of ZeroHedge. View original post here.

Update: The Maginot Line of 5.00 Lira per USDollar has been breached following reports from White House press secretary Sarah Sanders that two senior Turkish government officials have been sanctioned, noting that there is no evidence that Pastor Brunson did anything wrong.

Sarah Sanders announces sanctions for two Turkish government officials, who played "leading roles" in the arrest and detention of pastor Andrew Brunson. https://t.co/rdmNemzTTd pic.twitter.com/86orwN0VUd

— CBS News (@CBSNews) August 1, 2018

Treasury Secretary Steven Mnuchin says in statement:

“Pastor Brunson’s unjust detention and continued prosecution by Turkish officials is simply unacceptable,”

The sanctions target Turkey’s Minister of Justice Abdulhamit Gul and Minister of Interior Suleyman Soylu, both of whom “played leading roles in the organizations responsible for the arrest and detention of Pastor Andrew Brunson,”

“President Trump has made it abundantly clear that the United States expects Turkey to release him immediately."

"It is clearly very tricky time for the Turkish economy,” said Timothy Ash, a strategist at BlueBay Asset Management in London.

"The timing could not have been worse, which perhaps also will make the U.S. think long and hard about going down this route."

This means the Lira has lost 65% of its value in the last 5 years…

And just when you thought it couldn't get any worse, inflation in Turkey about to surge:  Turkey’s state pipeline operator Botas will raise the price of natural gas used by electric power plants by 50 percent effective Wednesday, raising expectations for a hike in consumer prices.

The question is, how will 'strongman' Erdogan respond to this? Shut down Incirlik? Buy more arms from Russia?

Let's just hope he was stockpiling gold…

*  *  *

Escalating rhetoric is about to turn into economic actions as Bloomberg reports Washington has prepared a list of Turkish entities and individuals that it will target should it decide to impose sanctions on Recep Tayyip Erdogan’s government for imprisoning U.S. citizens and employees of its diplomatic mission, according to two people with knowledge of the matter.

The Lira collapsed to record lows… at 4.9979/USD, ominously near the psychologically-critical 5.00 level.

Bloomberg adds that while negotiations to release one of the people, evangelical Pastor Andrew Brunson, are ongoing, the preparation of the so-called “designation packages" shows how close the U.S. has come to imposing unprecedented penalties against a NATO ally.

Turkey's ETF is also tumbling…

Interestingly, the sanctions are being prepared under the Global Magnitsky Act of 2016, which allows the U.S. government to target individuals, companies or other entities involved in corruption or human-rights abuses anywhere in the world. Sanctions under the act allow for the seizure of assets in the U.S., travel bans and prohibitions on doing business with U.S. entities.

These is the same method of sanctioning that has been used to target Putin's closest allies.


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