Detained US pastor in Turkey appeals for release 46min

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Simon Derrick, chief currency strategist at BNY Mellon, said "a seeming disconnect between USA markets and those elsewhere is becoming increasingly obvious", given the performance of US equities and the dollar in 2018.

The Turkish lira has nosedived over the past week amid concerns over President Recep Tayyip Erdogan's ability to deal with the turmoil and a diplomatic spat with the United States. Total issuance is expected to top 90 billion yuan (US$14 billion) in 2018, according to a January forecast by JPMorgan Chase, recovering from last year's 40 per cent slump to 71 billion yuan and a far cry from the record 116 billion yuan record in 2016.

Mr Erdogan, on the other hand, has a laundry list of entities he views as the perpetrators of his country's money malaise.

U.S. President Donald Trump and his vice president Mike Pence have repeatedly called for the pastor's release and have sanctioned two Turkish ministers after a Turkish court moved him to house arrest after 21 months in prison.

The economic crisis that has developed in Turkey has added to the concerns about the dual impact of escalating global trade tensions and a stronger USA dollar on emerging market economies.

Turkey and the USA are now experiencing rocky relations following Washington's imposition of sanctions on Interior Minister Suleyman Soylu and Justice Minister Abdulhamit Gul for not releasing American pastor Andrew Brunson, who faces terrorism charges in Turkey. More than 30 percent of the lira's loss has come since June, when Erdogan took over the office with new sweeping powers.

The ministry said Monday it initiated legal investigations against 346 social media accounts "which posted content provoking the dollar exchange rate".

Adding to overnight gains, the dollar last traded up 0.1 percent at 111.25 yen JPY=.

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Why is Erdogan mad at the United States?

Conventional economic wisdom says that one way to calm anxious financial markets and slow inflation would be to raise interest rates.

The Turkish leader also said his nation was facing an "economic siege", denouncing the currency movements as an "attack against our country".

In a joint statement issued Tuesday, the industrialists' group TUSIAD and the Union of Chambers and Commodity Exchanges called on the government to allow the central bank to raise interest rates to help overcome the currency crisis.

The Central Bank also lowered the amount of cash commercial lenders must keep in reserve with regulators. He did not say when the boycott would start or how it would be enforced. He renewed a call on Turkish citizens to convert their dollars into the local currency. He can't risk losing face among his supporters but he also can't risk leading them into ruin.

Given that the European banking system isn't as robust as, say, North America's (or ours) - the Europeans didn't respond as decisively to the crisis as other systems - there is some potential for the problems in Turkey to be exported through the EU system, although neither that potential nor its impact on the EU should be overstated.

Meanwhile, there are those taking advantage of low lira pricing.