A diplomatic spat between Turkey and the United States over the detention of an American pastor has grown into a crisis, leading to the lira diving against the dollar. On Wednesday, the index hit a fresh 13-month high.
His Highness the Amir Sheikh Tamim bin Hamad al-Thani's working visit to Turkey on Wednesday is significant as it comes in the wake of USA sanctions imposed on Ankara amid a dispute between the North Atlantic Treaty Organisation allies that has sent the lira to a record low against the dollar. The euro rose 0.2 percent to $1.1367, away from Wednesday's low of $1.1301.
Maybe we can enjoy that feeling now, as worries seem to have eased over Turkey and its faltering currency, which as of Monday had marked a 30-per-cent-plus weekly plummet against the USA dollar. For investors, the weakening ties have undermined the position of the West, and the U.S.in particular, as a safety net for Turkey - a role that Trump seems only too willing to relinquish anyway, and not only where Turkey is concerned.
Markets are concerned by Erdogan's influence over the economy and his resistance to interest rate increases to tackle double-digit inflation.
The common currency touched a 13-month low at 1.12660 Swiss franc before moving to $1.12775, down 0.4 percent, according to EBS data.
Meanwhile, the country's interior ministry said it was investigating 346 social media accounts which it said had "posted content provoking the dollar exchange rate".
The euro declined to $1.1330, the lowest since July 2017, before edging to $1.13335, down almost 0.7 percent on the day.
Turkey slaps 140% tariff on American alcohol
The political spat with Washington has added to pressure on Turkey's currency, the lira, which has plunged against the dollar . An upper court had yet to rule on the appeal, his lawyer told Reuters. "We will impose a boycott on USA electronic products".
Finance Minister Berat Albayrak assured worldwide investors on Thursday that Turkey would emerge stronger from its currency crisis, insisting that the country's banks were healthy. However, the bout of turmoil across emerging markets had already dimmed the outlook for world growth and spooked investors out of resources. The strength of the USA dollar was putting extra pressure on commodities priced in the currency.
European shares recovered on Thursday after Beijing said it would hold trade talks with the United States this month, spurring risk appetite, although Italian shares fell sharply as Atlantia sank. It was last down 0.2 percent at 126.08 yen. Investor reactions have so far been positive, albeit cautious.
In US markets on Thursday, the Dow Jones industrial average rose 1.58% and the S&P 500 gained 0.79%. This precipitated a 45 percent drop in the price of the Turkish Lira.
The pound rose 0.12% on Thursday after 10 straight days of falls, though concern about a hard Brexit continued to undermine the sterling.
Brent crude oil futures fetched US$71.36 a barrel, down 0.1 percent in Asia on Friday after a 0.69 percent rise the previous day.
It touched a record low of 7.24 to the dollar early on Monday, rattling global stock markets and threatening the stability of Turkey's financial sector. It was last up 0.4 percent at 96.762. USA gold futures for December delivery settled down $1, or 0.1 percent, at $1,184 per ounce.