Turkey Caught in a Spiral of Lira Crises

A money changer holds Turkish lira banknotes at a currency exchange office in Ankara, Turkey October 12, 2021. (Reuters)
A money changer holds Turkish lira banknotes at a currency exchange office in Ankara, Turkey October 12, 2021. (Reuters)
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Turkey Caught in a Spiral of Lira Crises

A money changer holds Turkish lira banknotes at a currency exchange office in Ankara, Turkey October 12, 2021. (Reuters)
A money changer holds Turkish lira banknotes at a currency exchange office in Ankara, Turkey October 12, 2021. (Reuters)

Turkey's lira has lost nearly a quarter of its value this year as soaring inflation and the central bank's reluctance to raise interest rates stoke fears of another currency crisis.

No stranger to booms and busts as well as sharp swings in its currency, Turkey has long been considered among the riskier emerging markets, running large current-account deficits and relying on external financing to fuel unorthodox pro-growth policies.

Below are some lira flashpoints of recent decades:

2000/2001 - Banking & currency crisis

Concerns over the health of a fragile banking sector escalate in late 2000, prompting banks to close interbank lines to vulnerable lenders and investors to dump stocks and government bonds.

The collapse of Demir Bank accelerates capital flight, and the central bank halts emergency lines of credit to lenders to preserve its domestic assets.

Turkey receives $10.5 billion from the International Monetary Fund, allowing the central bank to defend the lira's dollar peg, but not before the currency plunges 25% in less than three weeks.

A political crisis further undermines confidence in the system, prompting an attack on the lira. The government lets the lira float on Feb. 22 - it sinks by about one-third against the dollar.

2013/2014 - Taper tantrum, corruption scandal

Turkey is among the emerging markets hit after Federal Reserve Chair Ben Bernanke announces in May 2013 that the US central bank will reduce its asset purchases.

Domestic woes add to the pressure, with a corruption scandal forcing the resignation of key ministers and a cabinet reshuffle.

Policymakers are reluctant to act to stem the lira's fall as President Recep Tayyip Erdogan, ahead of local elections, calls for keeping interest rates low. The currency's slide forces the central bank's hand in January 2014: it hikes rates to 12% from 7.75% at an emergency overnight meeting.

2018 - Washington sanctions, Erdogan doubles down

Turkey experiences seismic political shifts with a July 2016 coup attempt and a constitutional referendum in 2017 that prompts a switch from a parliamentary to a presidential system.

In May 2018, Erdogan pledges tighter control of monetary policy and lower rates, contributing to concerns about economic fragility.

Washington imposes economic sanctions after Turkey detains American pastor Andrew Brunson on terrorism charges, roiling the currency, with the lira dropping 25% in August alone.

The meltdown sparks an economic crisis, prompting a raft of sovereign ratings downgrades and sending ripples through emerging markets.

2021/2022 - Roaring inflation

The central bank slashes interest rates by 500 basis points between September and December 2021 even as inflation surges to 36% by year's end on supply chain snags and rising demand with the reopening after COVID-19.

The lira plunges nearly 30% in November, prompting policymakers to take steps to persuade savers, banks and companies to hold lira rather than foreign currency while the central bank intervenes to steady the lira.

After a few weeks of relative calm in early 2022, the lira crisis returns with Russia's Feb. 24 invasion of Ukraine adding to global price rises. Turkey's inflation breaks above 70% and is expected to accelerate. Geopolitics adds pressure as Ankara opposes NATO membership for Sweden and Finland, and a border offensive into Syria looms.

With net foreign currency reserves deeply negative, interest rates at 14% and Erdogan pledging to keep rates low, analysts fear the country may be facing another currency crisis.



Saudi Arabia, Syria Sign Joint Airline and Telecoms Deals

Officials pose after signing a framework agreement for developmental cooperation and the launch of 45 development initiatives between the Syrian Development Fund and Saudi Arabia's Development Committee at the People's Palace in Damascus, Syria, Saturday, Feb. 7, 2026. (AP)
Officials pose after signing a framework agreement for developmental cooperation and the launch of 45 development initiatives between the Syrian Development Fund and Saudi Arabia's Development Committee at the People's Palace in Damascus, Syria, Saturday, Feb. 7, 2026. (AP)
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Saudi Arabia, Syria Sign Joint Airline and Telecoms Deals

Officials pose after signing a framework agreement for developmental cooperation and the launch of 45 development initiatives between the Syrian Development Fund and Saudi Arabia's Development Committee at the People's Palace in Damascus, Syria, Saturday, Feb. 7, 2026. (AP)
Officials pose after signing a framework agreement for developmental cooperation and the launch of 45 development initiatives between the Syrian Development Fund and Saudi Arabia's Development Committee at the People's Palace in Damascus, Syria, Saturday, Feb. 7, 2026. (AP)

Syria and Saudi Arabia signed deals Saturday that include a joint airline and a $1-billion project to develop telecommunications, officials said, as Syria seeks to rebuild after years of war.

The new authorities in Damascus have worked to attract investment and have signed major agreements with several companies and governments.

Syrian Investment Authority chief Talal al-Hilali announced a series of deals including "a low-cost Syrian-Saudi airline aimed at strengthening regional and international air links".

The agreement also includes the development of a new international airport in the northern city of Aleppo, and redeveloping the existing facility.

Hilali also announced an agreement for a project called SilkLink to develop Syria's "telecommunications infrastructure and digital connectivity".

Syrian Telecommunications Minister Abdulsalam Haykal told the signing ceremony that the project would be implemented "with an investment of around $1 billion".

For decades, Syria was unable to secure significant investments because of Assad-era sanctions.

But the United States fully removed its remaining sanctions on Damascus late last year, paving the way for the full return of investments.

Syria and Saudi Arabia also inked an agreement on water desalination and development cooperation on Saturday.

At the ceremony, Saudi Investment Minister Khalid Al-Falih announced the launch of an investment fund for "major projects in Syria with the participation of the (Saudi) private sector".

The deals are part of "building a strategic partnership" between the two countries, he said.

Syria's Hilali said the agreements targeted "vital sectors that impact people's lives and form essential pillars for rebuilding the Syrian economy".

Syria has begun the mammoth task of trying to rebuild its shattered infrastructure and economy.

In July last year, Riyadh signed investment and partnership deals with Damascus valued at $6.4 billion to help rebuild the country's infrastructure, telecommunications and other major sectors.

A month later, Syria signed agreements worth more than $14 billion, including investments in Damascus airport and other transport and real estate projects.

This week, Syria signed a preliminary deal with US energy giant Chevron and Qatari firm Power International to explore for oil and gas offshore.


India’s Modi Lauds Interim Trade Pact After US Tariff Rollback

Indian Prime Minister Narendra Modi addresses the media before the budget session of Parliament at Parliament House in New Delhi, India, 29 January 2026. (EPA)
Indian Prime Minister Narendra Modi addresses the media before the budget session of Parliament at Parliament House in New Delhi, India, 29 January 2026. (EPA)
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India’s Modi Lauds Interim Trade Pact After US Tariff Rollback

Indian Prime Minister Narendra Modi addresses the media before the budget session of Parliament at Parliament House in New Delhi, India, 29 January 2026. (EPA)
Indian Prime Minister Narendra Modi addresses the media before the budget session of Parliament at Parliament House in New Delhi, India, 29 January 2026. (EPA)

Indian Prime Minister Narendra Modi on Saturday hailed an interim trade agreement with the United States, saying it would bolster global growth and deepen economic ties between the two countries.

The pact cuts US "reciprocal" duties on Indian products to 18 percent from 25 percent, and commits India to large purchases of US energy and industrial goods.

US President Donald Trump, while announcing the deal Tuesday, had said Modi promised to stop buying Russian oil over the war in Ukraine.

The deal eases months of tensions over India's oil purchases -- which Washington says fund a conflict it is trying to end -- and restores the close ties between Trump and the man he describes as "one of my greatest friends."

"Great news for India and USA!" Modi said on X on Saturday, praising US President Donald Trump's "personal commitment" to strengthening bilateral ties.

The agreement, he said, reflected "the growing depth, trust and dynamism" of their partnership.

Modi's remarks came hours after Trump issued an executive order scrapping an additional 25 percent levy imposed over New Delhi's purchases of Russian oil, in a step to implement the trade deal announced this week.

Modi, who has faced criticism at home about opening access of Indian agricultural markets to the United States and terms on oil imports, did not mention Russian oil in his statement.

"This framework will also strengthen resilient and trusted supply chains and contribute to global growth," he said.

It would also create fresh opportunities for Indian farmers, entrepreneurs and fishermen under the "Make in India" initiative.

In a separate statement, Commerce Minister Piyush Goyal said the pact would "open a $30 trillion market for Indian exporters".

Goyal also said the deal protects India's sensitive agricultural and dairy products, including maize, wheat, rice, soya, poultry and milk.

Other terms of the agreement include the removal of tariffs on certain aircraft and parts, according to a separate joint statement released Friday by the White House.

The statement added that India intends to purchase $500 billion of US energy products, aircraft and parts, precious metals, tech products and coking coal over the next five years.

The shift marks a significant reduction in US tariffs on Indian products, down from a rate of 50 percent late last year.

Washington and New Delhi are expected to sign a formal trade deal in March.


Gold Bounces Back on Softer Dollar, US-Iran Concerns; Silver Rebounds

Gold and silver bars are stacked in the safe deposit boxes room of the Pro Aurum gold house in Munich, Germany, January 10, 2025. REUTERS/Angelika Warmuth
Gold and silver bars are stacked in the safe deposit boxes room of the Pro Aurum gold house in Munich, Germany, January 10, 2025. REUTERS/Angelika Warmuth
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Gold Bounces Back on Softer Dollar, US-Iran Concerns; Silver Rebounds

Gold and silver bars are stacked in the safe deposit boxes room of the Pro Aurum gold house in Munich, Germany, January 10, 2025. REUTERS/Angelika Warmuth
Gold and silver bars are stacked in the safe deposit boxes room of the Pro Aurum gold house in Munich, Germany, January 10, 2025. REUTERS/Angelika Warmuth

Gold rebounded on Friday and was set for a weekly gain, helped by bargain hunting, a slightly weaker dollar and lingering concerns over US-Iran talks in Oman, while silver recovered from a 1-1/2-month low.

Spot gold rose 3.1% to $4,916.98 per ounce by 09:31 a.m. ET (1431 GMT), recouping losses posted during a volatile Asia session that followed a fall of 3.9% on Thursday. Bullion was headed for a weekly gain of about 1.3%.

US gold futures for April delivery gained 1% to $4,939.70 per ounce.

The US dollar index fell 0.3%, making greenback-priced bullion cheaper for the overseas buyers.

"The gold market is seeing perceived bargain hunting from bullish traders," said Jim Wyckoff, senior analyst at Kitco Metals.

Iran and the US started high-stakes negotiations via Omani mediation on Friday to try to overcome sharp differences over Tehran's nuclear program.

Wyckoff said gold's rebound lacks momentum and the metal is unlikely to break records without a major geopolitical trigger.

Gold, a traditional safe haven, does well in times of geopolitical and economic uncertainty.

Spot silver rose 5.3% to $74.98 an ounce after dipping below $65 earlier, but was still headed for its biggest weekly drop since 2011, down over 10.6%, following steep losses last week as well.

"What we're seeing in silver is huge speculation on the long side," said Wyckoff, adding that after years in a boom cycle, gold and silver now appear to be entering a typical commodity bust phase.

CME Group raised margin requirements for gold and silver futures for a third time in two weeks on Thursday to curb risks from heightened market volatility.

Spot platinum added 3.2% to $2,052 per ounce, while palladium gained 4.9% to $1,695.18. Both were down for the week.