President Recep Tayyip Erdoğan met with Emir Sheikh Tamim bin Hamad Al Thani of Qatar at the Presidential Complex on August 15 - Photo by Turkey's President Office

JAKARTA (TheInsiderStories) – Qatar will rapidly implement an investment package of $15 billion in Turkey to help the country’ financial problems.

The statement made following the meeting that views were exchanged on bilateral relations and regional matters between President Recep Tayyip Erdoğan met with Emir Sheikh Tamim bin Hamad Al Thani of Qatar at the Presidential Complex yesterday (15/08).

The two leaders further highlighted to strengthen the relations between Turkey and Qatar in every field.

Last week, the Turkish Lira plunged drastically in recent weeks as its deteriorating relations with the United States (US) exacerbated the weak confidence on the economy. Lira dropped up to 17 percent against the U.S dollar to the lowest level of all time.

Many economists had been predicting for months that Erdogan’s actions would lead to a currency crisis, which is what’s happening now. The president itself denied Turkey was in a crisis. He stressed the collapse of Lira as the ‘fluctuations’ of global financial market and had nothing to do with the economic fundamentals.

Fitch Ratings, like other global rating agencies assessed Turkish debt goes into junk status. The international rating agency warned that the erosion of central bank independence would put “further pressure on Turkish foreign debt credit profile.”

While, The International Monetary Fund (IMF) noted that rapid growth in Turkey has contributed to economic overheating, in the form of widening internal and external imbalances, including a positive output gap, high inflation and a wider current account deficit.

IMF noted that large external financing needs, limited foreign exchange reserves, changes in investor sentiment towards emerging markets, and persistent domestic and geopolitical risks also pose challenges.

These days, Turkey‘s financial crisis has bring negative impact to the emerging market. The Turkish Central Bank itself decided to pour a series of liquidity easing to reduce tensions over banking liquidity problems.

Indonesian President Joko Widodo immediately held a limited meeting to elaborate more the impact of the global market turbulence to the country. While on Monday (13/08), Bank Indonesia (BI) right away open the foreign exchange auction when the Rupiah dropped to Rp14,600 against US dollar and intervene the money market.

In Indonesia, the central bank continued to intervene the foreign exchange (FX) market to curb global pressure on the Rupiah that has weakened beyond a new psychological level of Rp14,600 per US dollar. On Monday, the rupiah weakened 137 points at Rp14,643 against the US dollar in the spot market compared to last week at Rp14,486 over the greenback.

Executive Director of Monetary Management Department for BI, Nanang Hendarsah, stated, to anticipate the stronger pressure, BI is prepared to conduct dual intervention in FX and government bond market.

He added, the rupiah` weakening to a new psychological limit of Rp14,600 per US dollar as being inseparable from the negative impact of the global market sentiment following Turkey` financial turmoil. Hendasrah urged that the pressure on the rupiah until Monday afternoon could still be controlled.

Meanwhile, Central de la Republica Argentina (BCRA) took quick steps by raising its benchmark interest rate by 500 basis points to a record high of 45 percent. The central bank said in a press statement will maintain this level at least until October.

The decision to raise interest was taken after the Argentine currency broke the ARS30 per US dollar level for the first time on Monday. Peso finally closed down 2.3 percent to ARS29.93 against the American dollar.

BCRA also said it would gradually release the ownership of ARS1 trillion (US$33.2 billion) short-term bonds with the aim of reducing the volatility of the Peso when this effect was released. In addition, the central bank also replaced the dollar auction system to make it more difficult for traders and speculators to predict.

BCRA also will face another mega maturity of LEBACs for about $525,000 million, with the aim of reducing those maturities by at least 25 percent. The new US dollar rally have complicated the objective of the president of the BCRA Luis Caputo, but still manages to international banks about $5 trillion in order to clean letters from the market for about $140,000 million.

Email: linda.silaen@theinsiderstories@gmail.com