Turkey’s dollar bonds drop, lira loses 2.5% on news of expected Syria incursion and Trump threat to Turkish economy if military move goes too far

By bne IntelliNews October 7, 2019

Turkey’s sovereign dollar bonds saw their sharpest decline in nearly a month and the Turkish lira (TRY) lost around 2.5% against the dollar on October 8 as anxieties mounted over military operations Ankara is planning for northeast Syria and US President Donald Trump sent out a tweet threatening to "obliterate" the Turkish economy should the Turks go too far with an incursion that only hours earlier he green-lighted.

The 2038 dollar bond issue lost 1.3 cents to 102.102 cents in the dollar, its biggest daily fall since September 10, according to Tradeweb data cited by Reuters. The 2040 issue lost 1.2 cents to 96.494 cents in the dollar, the data showed.

The White House said on October 6 that Ankara would soon move forward with a long-planned military operation to create what it calls a “safe zone” in northeastern Syria, which it wants to clear of Kurdish militia that have served as an ally in the US fight against Islamic State but which are seen as a “terrorist” threat by Turkey.

However, later in the day as Trump faced cries of “betrayal” from the Kurds and attacks from both Democrats and Republicans in the Senate, the US president warned that he would “totally destroy and obliterate” the Turkish economy if Turkey took any action he considered “off-limits”.

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