Turkish currency falls 5% at the end of a tumultuous week; European stocks drop after Turkish court rejects US pastor´s appeal for release 2.46pm BST The Turkish lira has taken another battering today, falling 5% to 6.1 to the dollar (it lost nearly 7% at one stage) and the Turkish stock market is down 1%. It has been a tumultuous week that saw the lira go into meltdown on Monday when it hit a record low of 7.2 against the dollar and the panic spread to other emerging markets. A pledge by Turkey´s central bank to provide liquidity to banks and other measures, a pledge from Qatar to provide $15bn in loans to Turkey, and reassuring words from the finance minister yesterday helped calm nerves. 1.41pm BST Even so, Schmieding reckons that the impact on the eurozone will be very limited. He says:Exports: The eurozone earns 0.57% of its GDP by selling goods to Turkey. Even a 20% fall in exports to Turkey would not subtract more than 0.1ppt from annual Eurozone GDP growth. As global demand remains healthy, eurozone firms could likely contain the damage further by switching to other markets for some of these affected goods with only modest reductions in their selling prices. 1.39pm BST Holger Schmieding, economist at Germany´s Berenberg, says the bank has lowered its year-end forecasts for the euro to $1.17 from $1.21, due to the Turkey crisis.Turkey is no small fry. It contributes 1% to global GDP. Beyond the obvious geopolitical concerns, a major Turkish recession would pose a significant challenge for financial markets and for other economies. Remembering the tremors which Turkey´s smaller neighbour Greece once sent through European and global markets, investors are understandably nervous. Adding to concerns about Italy´s 2019 budget and Brexit uncertainty, the noise from Turkey could delay the rebound in eurozone business confidence and growth for a few more months despite the easing of US-EU trade tensions. 1.24pm BST Over in the US, Donald Trump has revealed that h ...
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