Turkish lira, stocks tumble as US withdraws visa services

Turkish lira, stocks tumble as US withdraws visa services
Written by:
Ilona Billington
9th October 2017
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The Turkish lira and its main stock market index, the BIST 100, both sank Monday following escalation of a disagreement between Turkey and the US following the March arrest of an US employee by the Turkish authorities.

The arrested individual is a Turkish national. Hamza Ulucay, is a translator at the U.S. Consulate in Adana in Turkey who was arrested in the spring for alleged links to outlawed Kurdish militants, including Muslim cleric Fethullah Gulen.

The matter has been bubbling for some time, but boiled over in the last 48 hours. Washington issued a statement saying it was halting its visa assessment and approval action regarding Turkish nationals wishing to enter the US.

Early Monday, the Turkey reciprocated with an identical announcement. The US embassy in Turkey, then issued a statement for US citizens.

“The government of Turkey announced the immediate suspension of visa services to U.S. citizens, effective October 8, 2017,” the Us embassy in Ankara said. “According to the government’s announcement, this includes the issuance of physical ‘sticker’ visas at border posts, and the online Turkish electronic visa (e-visa). “

The action weighed heavily on the lira and Turkish stock markets in already thin trading. The BIST hit a record low on the news, with Turkish Airlines being one of the index’s biggest fallers. Pegasus Airlines also traded lower on the index, as did TAV Airports Holdings.

The resulting and ongoing disagreements are hurting diplomatic relations, culminating in this latest action, which effectively means no US citizen can visit Turkey and vice versa.

However, analysts said there was unlikely to be any long-term contamination from the current Turkish weakness into other emerging financial markets. But, it could hit investor sentiment regarding emerging markets in the short-term.

Emerging market currencies are also currently under pressure on expectations of an imminent US Federal Reserve rate hike, which is supporting the US dollar.

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