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Turkish lira firm on ‘positive’ Erdoğan-Biden meeting

Emerging market (EM) shares fell for a fifth straight session Monday as weak factory output data from China dented sentiment, while Turkey’s lira firmed after Ankara and Washington agreed to form a joint mechanism to strengthen ties.

The lira outperformed EM peers, rising 0.7% after a 7.6% drop in October on tensions with the West and monetary policy uncertainty.

President Recep Tayyip Erdoğan and his United States counterpart Joe Biden held talks in “a very positive atmosphere” on the sidelines of the G-20 summit, a senior Turkish official said.

Tensions between the two nations have ratcheted up over Turkey’s purchase of Russian air defense systems.

Biden told Erdoğan his request for F-16 fighter jets had to go through a process in the U.S., while Erdoğan said Biden has shown a “positive attitude” toward Turkey’s purchase and modernization of F-16 fighter jets.

The U.S. is discussing ways for Turkey to buy F-16 fighters after a deal for more advanced F-35s was scrapped due to Ankara’s purchase of a Russian missile system, officials said recently.

Erdoğan said Oct. 17 that Ankara wants to buy the cheaper F-16s using the $1.4 billion (TL 13.45 billion) it allotted for the F-35 fighter jet program.

Erdoğan has said Washington offered Ankara a package of F-16 jets and modernization kits in exchange for the payment. But one U.S. official said that any possible F-16 order could be dogged by the same issue that forced the cancellation of the F-35s: Turkey’s decision to buy an S-400 missile system from Russia. Turkey has been indicating that Ankara still intends to buy a second batch of S-400s from Russia, despite opposition from the U.S.

Most other EM currencies fell as investors awaited the U.S. Federal Reserve’s (Fed) two-day meeting set to end on Wednesday, with the bank expected to start tapering pandemic-related stimulus.

“The (Fed) meeting this week has taper effectively priced in. Expectations are growing for some signal on rate hikes, although we think the (Fed) will still de-couple hikes from taper,” Mizuho analysts said.

Source
dailysabah

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