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ANKARA — Turkey's embattled lira tumbled almost 5 per cent in value on Thursday as the resignation of the deputy central bank governor intensified market concerns over the direction of monetary policy.

The lira has lost nearly 45 per cent of its value since the start of the year against the dollar as investors took fright over a bitter row with the United States and anxiety over the direction of policy under President Recep Tayyip Erdogan.

The lira was trading at 6.73 to the dollar, a loss of value of 4.5 per cent on the day, with Turkish markets closed due to a holiday.

A particular concern has been the independence of the central bank which has not moved its headline interest rate higher despite the nose-diving currency and inflation that has surged to almost 16 per cent.

Economists fear that Erdogan is pressuring the nominally independent institution not to raise rates in order to maintain growth, after he described interest rates as the "mother and father of all evil".

State-run news channel TRT Haber said that Deputy central Bank Deputy Governor Erkan Kilimci was stepping down from the job he has held for the last two years to a new post at the Development Bank of Turkey.

This should open the way for Erdogan to choose a figure of his own choosing as new deputy governor. Kilimci was one of four deputies to governor Murat Cetinkaya who sit on the monetary policy committee that sets interest rates.

"With this development [the resignation of Kilimci] fuelling concerns over Turkey's fragile financial system, the lira could be set to extend losses," Lukman Otunuga, research analyst at FXTM, told AFP.

"Lira weakness may remain a dominant theme amid ongoing fears of double digit inflation, the deepening of current account deficit and questions over the central bank independence," he added.

Turkey has been slapped with sanctions on two ministers and also with doubled tariffs on aluminium and steel by the United States over its holding for the last two years of US pastor Andrew Brunson.

Economists fear further measures from the United States would cause more bleeding for the lira while the domestic outlook remains uncertain.

Turkey will on Monday release inflation data for August — which will be scrutinised for any further jump. September 10 sees growth data for the second quarter, with some economists fearing Turkey risks going into recession in 2019 due to the tighter monetary conditions.

"The latest Turkish activity data suggest that the plunge in the lira since May, and the associated sharp tightening of financial conditions, has tipped the economy into recession. Things are only likely to get worse," Capital Economics said in a note.

A crucial watershed is expected to be the next meeting of the central bank on September 13, with markets hollering for a hike to support the lira and the currency likely to be punished in case of no action.

MOSCOW — A new state-owned Russian carmaker on Wednesday launched a Soviet-influenced luxury vehicle it hopes will lure the domestic super rich away from brands such as Rolls-Royce. 

A glitzy presentation at a Moscow motor show saw Russian Trade Minister Denis Manturov help unveil two models from the new "Aurus" brand — the Senat limousine and a smaller Senat sedan.

Putin at his inauguration for a fourth presidential term this May rode to the Kremlin in a boxy black Aurus limousine with a huge front grill.

This marked a return to the Soviet-era practice of leaders riding in domestically made ceremonial cars. In previous years, Putin has opted for a Mercedes, instead.

The new designs are influenced by Soviet-era cars produced only for top officials, the carmakers said, and the Kremlin has already received a number of the vehicles.

Chief designer Vadim Pereverzev told AFP that market research among Russians showed "there is demand for a high-tech quality product made in our country, in particular for a car of such a class."

"Consumers of such cars, you could say they are tired of Rolls-Royces, Mercedes and Maybachs," said Pereverzev, who has worked with Italian brands including Fiat.

The launch comes days after arms maker Kalashnikov surprised observers by presenting a new electric car with a retro powder blue design.

Pereverzev acknowledged design influences for the Aurus Limousine included a model made for Soviet dictator Joseph Stalin, the ZIS, which also featured a huge chrome grille.

"I'd say that it was more that era that inspired our designers — an era of great achievements by our state when cars like the ZIS appeared," Pereverzev said.

The cars were developed by a state enterprise called NAMI, which owns a controlling stake in the Aurus brand, in conjunction with Russian automotive group Sollers.

Russian state funding for the project came to around 12 billion rubles ($176 million).

There is also an investor from United Arab Emirates, Tawazun, which invested 110 million euros, Manturov said.

The brand is hoping to attract both wealthy Russians and international customers who currently opt for Western-made models.

"We will not sell this vehicle only in Russia, we will sell it abroad," the CEO of the Aurus brand, Franz Gerhard Hilgert, said in his presentation.

The price of the model will be "somewhere in between Mercedes and Rolls-Royce", said Hilgert, who used to represent Daimler Chrysler in Russia.

WASHINGTON — The United States and Mexico agreed on Monday to overhaul the North American Free Trade Agreement (NAFTA), putting pressure on Canada to agree to new terms on auto trade and dispute settlement rules to remain part of the three-nation pact.

Auto stocks soared and the S&P 500 and the Nasdaq rallied to record highs on the expectation that Canada would sign onto the deal and ease the economic uncertainty caused by US President Donald Trump's repeated threats to ditch the 1994 accord.

Details of gains and concessions in the deal were only starting to emerge on Monday. Trump threatened he still could put tariffs on Canadian-made cars if Canada did not join its neighbours and warned he expected concessions on Canada's dairy protections.

"I think with Canada, frankly, the easiest we can do is to tariff their cars coming in. It's a tremendous amount of money and it's a very simple negotiation. It could end in one day and we take in a lot of money the following day," Trump said.

Trump and Canadian Prime Minister Justin Trudeau discussed trade in a telephone call on Monday, and "agreed to continue productive conversations", White House spokeswoman Sarah Sanders said in a statement.

Negotiations among the three partners, whose mutual trade totals more than $1 trillion annually, have dragged on for more than a year, putting pressure on the Mexican peso and the Canadian dollar. Both currencies gained against the US dollar after Monday's announcement.

The political stakes are high for all three countries. Trump and Republicans in the US Congress up for re-election in November want to ensure farmers and other voters whose jobs depend on trade with Canada and Mexico that the deal is sealed.

Mexican President Enrique Pena Nieto wants to sign the agreement before leaving office at the end of November, and Trudeau faces a national election expected by October 2019.

Canadian Foreign Minister Chrystia Freeland is expected to travel to Washington for talks on Tuesday. Her spokesman said Canada would sign only a new agreement that is good for the country.

Trump's economic adviser, Larry Kudlow, told reporters the deal with Mexico should serve as a "reset" for talks with Canada.

90-day window

If talks with Canada are not wrapped up by the end of this week, Trump plans to notify Congress that he has reached a deal with Mexico, but would be open to Canada joining, US Trade Representative Robert Lighthizer told reporters.

The White House said Trump will sign the deal in 90 days. Congress has to approve it.

"There are still issues with Canada but I think they could be resolved very quickly," a senior trade official told Reuters in an interview.

Some Republicans in Congress called the deal a positive step, but said Canada must be part of the new pact.

Trudeau spoke to Pena Nieto on Sunday and shared their commitment to reaching a successful conclusion of NAFTA "for all three parties", the prime minister's office said.

Mexican Foreign Minister Luis Videgaray told a news conference in Washington that if Canada and the United States do not reach an agreement on NAFTA, "we already know that there will still be a deal between Mexico and the United States".

New auto rules

The Mexico-US discussions focused on crafting new rules for the automotive industry, which Trump has put at the heart of his drive to rework a pact he has repeatedly described as a "disaster" for American workers.

Matt Blunt, president of the American Automotive Policy Council, which represents General Motors Co., Ford Motor Co. and Fiat Chrysler Automobiles NV, said the group was optimistic about the new deal, though it was still reviewing the details.

The deal would require 75 per cent of auto content to be made in the NAFTA region, up from the current level of 62.5 per cent, a US trade official said. A fact sheet describing the bilateral agreement specified the content would be made in the United States and Mexico.

That requirement could shift some auto parts manufacturing to Mexico from China, a White House official told Reuters, speaking on condition of anonymity.

The Trump administration said the deal improves labour provisions, in part by requiring 40 per cent to 45 per cent of auto content to be made by workers earning at least $16 per hour.

That measure could move some production back to the United States from Mexico and should lift Mexican wages, the White House official said.

The United States relented on its demand for an automatic expiration for the deal, known as a "sunset clause".

Instead, the United States and Mexico agreed to a 16-year lifespan for the deal, with a review every six years that can extend the pact for 16 years, Lighthizer said. 

Mexico agreed to eliminate dispute settlement panels for certain anti-dumping cases, a move that could complicate talks with Canada, which had insisted on the panels.

Monday's announcement lifted equity markets in all three countries, with shares in automotive companies standing out on relief that the deal appeared to end the uncertainty that has dogged the sector for months.

General Motors Co., Ford Motor Co., and Fiat Chrysler Automobiles NV gained between 3.3 per cent and 4.8 per cent, while Canadian auto parts makers such as Magna International Inc. gained 4.6 per cent.

ISTANBUL  - The Turkish lira weakened on Tuesday as investors weighed up Turkey's efforts to manage its rift with the United States after Finance Minister Berat Albayrak warned that US trade sanctions against Ankara could destabilise the Middle East.
The row with Washington over an American evangelical Christian pastor detained in Turkey on terrorism charges has accelerated losses in the lira, which is down about 38 per cent against the dollar this year.
At 0509 GMT, the lira stood at 6.2000 against the dollar, easing from a close of 6.1200 on Monday, when it weakened to near 6.3 before rebounding in its first day of trade after a week-long holiday.
After meeting his French counterpart in Paris, Albayrak highlighted Ankara's push for better ties with Europe and took aim at the United States, saying US sanctions could ultimately aggravate the region's terrorism and refugee crises.
US President Donald Trump this month authorised a doubling of duties on aluminium and steel imported from Turkey, triggering retaliatory measures from Ankara.
Investors are also worried by a US Treasury investigation into state-owned Turkish lender Halkbank, which could face a potentially hefty fine over allegations of busting sanctions on Iran. The bank has said all its transactions were legal.
Turkey and the United States are also at odds over their diverging interests in Syria and US objections to Ankara's plan to buy Russian defence systems.

 

VALENCIA, Venezuela — About 100 workers protested outside tyre manufacturer Pirelli's Venezuela plant on Monday after finding the gates locked, ten days after the country announced a broad set of reforms including a massive hike in the minimum wage.

Employees were not told the plant would be shut, said union leader Luis Alvarez, who added it was not immediately known if it was temporary or if the operation had permanently closed its doors. 

"Production was falling, but they always kept us on the job," said worker Nicolas Altomaris, who was waiting at a gate for information. "Now they've made this decision to send us out without knowing if we'll return."

Union leaders say about 700 employees work at the plant. 

Pirelli and parent company China National Chemical Corp. Ltd. did not immediately respond to requests for comment. 

Venezuela's Information Ministry also did not immediately reply to an e-mail seeking comment.

On August, 17 President Nicolas Maduro ordered a 3,000 per cent minimum wage increase while also requiring that companies leave prices of their products fixed amid a hyperinflationary crisis.

Business leaders say the package is unsustainable and would force many firms to close their doors. 

In the past, Pirelli Venezuela has temporarily halted operations due to a lack of raw materials. Currency controls make it difficult to import such materials, while price controls can at times force companies to sell below production costs. 

The company, which supplies tyres for Formula One, manufactures tyres for cars, motorcycles, trucks and buses in Venezuela. It was acquired in 2015 by China National Chemical, known as ChemChina, which is owned by the Chinese government.

Multinational companies including Clorox Co. and Kellogg Co. have been steadily leaving the country amid shrinking demand caused by an economic collapse.

Maduro has said the country is victim of an "economic war" led by political adversaries with the help of Washington.

PARIS — "Our cows have been living off hay cut in June, there isn't any grass," says Jean-Guillaume Hannequin, a farmer in eastern France, who like his counterparts across much of northern Europe is wondering how he will feed his animals this winter.

Mediterranean countries long ago adapted their farming practices to little rain, but this year it is the north of Europe confronting a widespread drought that could see farmers having to send much of their herds to slaughter due to a lack of feed.

In Sweden, where swathes of territory were burned by wildfires this summer, as the country baked under century-high temperatures, the grain harvest is expected to be down around 30 per cent and it is unclear whether recent cooler temperatures will allow farmers to take in more hay.

"The feed shortage will be felt this coming winter," Harald Svensson, chief economist for the Swedish Board of Agriculture, told AFP, explaining that "most farmers have relied on their winter feed reserves during the drought this summer".

The situation is similar in Germany, where officials say one in 25 farms is at risk of going out of business. In Lower Saxony, a key region for growing fodder crops, the harvest is expected to be more than 40 per cent down from normal years.

In The Netherlands, the deficit for fodder is estimated to be 40 to 60 per cent, according to the agricultural association, with the deficit for grain at 20 per cent. 

 Price gouging 

The English countryside is far from its normal undulating green this year, having not seen a drought like this in 80 years, according to the official Agriculture and Horticulture Development Board (AHDB). Milk production is down sharply due to a lack of hay.

In France, "the east has been suffering since the beginning of July, and the rest of the country since August with an extended heatwave", said Patrick Benezit of the FNSEA umbrella group of French farmers' unions.

"In many places, even in the Massif Central, the 'water tower' of France, there won't be a second cutting of hay, this is really worrrying," he told AFP.

Benezit also criticised the price gouging for straw.

"Farmers need to buy straw to mix with hay to feed their animals, and the traders are profiting from the situation" by asking for up to 100 euros ($116) per tonne, he said, when straw sold for between 60 and 80 euros last year.

As prices for fodder and hay climb higher, farmers are sending animals to the slaughterhouse earlier than usual.

In Britain, the number of cattle slaughtered jumped by 18 per cent in July, with dairy cows making up a large portion, according to the AHDB.

In Germany, where the government has unlocked emergency aid for farmers, there was a 10 per cent increase in animals slaughtered in the first two weeks of July, according to authorities.

The Swedish government has responded by pledging 1.2 billion kronor (117 million euros, $135 million) in aid for farmers to buy fodder and avoid sending their animals to the slaughterhouse.

French farmers are concerned due to the monopoly on slaughterhouses by the Bigard group.

"We are afraid they'll turn the drought into a bonanza by buying our animals at even lower prices when we already have difficulty surviving," said one livestock farmer who requested anonymity.

 Throwing in the towel? 

The situation is dire for dairy farmers, who have already been complaining that they are not being paid enough for their milk to survive.

"The winter risks being catastrophic," said another French farmer. "To complement the rations of the animals we are going to have to buy grain, the price of which went up this summer, so milk will become more expensive to produce."

According to Erwin Schoepges, president of the European Milk Board which counts as members more than 100,000 small dairy farmers, "even before this drought, production costs weren't being covered".

He said farmers were producing milk at 40 to 45 cents per litre, but able to sell it for only around 30 to 33 cents a litre.

With the drought, their production costs will increase further, he said.

The European Commission has promised exceptional aid to farmers, like speeding up aid payments and allowing farmers to cut hay from fallow land.

But French farmer Hannequin is not optimistic.

"There are going to be a massive number of farms abandoned," he warned.

ISTANBUL — The Turkish lira firmed against the dollar on Friday after weakening in thin holiday trade this week, as a bitter standoff dragged on between Ankara and Washington over the fate of an American pastor being tried in Turkey.

The lira firmed to 6.0550 against the US currency from a close of 6.0950, having weakened 1 per cent on Thursday after Turkish President Recep Tayyip Erdogan's spokesman accused the United States of waging "economic war".

Trading volumes were thin and probably largely offshore as Turkish markets have been closed since Monday for the Muslim festival of Eid Al Adha. They will reopen on Monday. The lira closed at 6.01 last week.

"We do expect pressures to resume, most likely next week. This is the quiet before the storm," said Jakob Christensen, head of EM research at Danske Bank.

"We see the measures put in place ahead of the holiday last week as more like temporary relief measures rather than dealing with the symptoms of the crisis," he said.

Despite central bank and banking watchdog steps to underpin the lira, it has weakened 37 per cent against the dollar this year. The crisis is rooted in investor concern over Erdogan's influence on monetary policy and fuelled by the deepening row with the United States.

"We really need some more substantial measures from Turkey before we call the crisis as over," Christensen said. 

In a conference call last week, Finance Minister Berat Albayrak assured investors that Turkey would emerge stronger from the crisis, insisting its banks were healthy but being ready to provide support to the sector if needed.

Policy response 

One focus of interest for investors will be Turkey's medium-term programme for the economy, which Albayrak said he would announce in the first half of September.

Also looming is a central bank policy-setting meeting on September 13. When it last met in July, the bank left rates on hold, contrary to expectations, in its first policy decision since Erdogan was reelected with new executive powers.

Erdogan wants lower borrowing costs to boost growth and investors worry that his influence over monetary policy is weakening the bank's ability to fight inflation, which neared 16 per cent in July, its highest in more than 14 years.

On Monday, US President Donald Trump ruled out concessions to Ankara in return for the release of pastor Andrew Brunson, who is being tried in Turkey on terrorism charges. Trump's National Security Adviser John Bolton said Ankara had made a "big mistake" by not freeing Brunson.

Erdogan spokesman Ibrahim Kalin responded by saying Washington must respect the legal process concerning the pastor and that Bolton's remarks showed the United States was targeting Turkey's economy.

Bolton had said he was sceptical about $15 billion of investment support from Qatar, saying it was "utterly insufficient to have an impact on Turkey's economy".

NEW YORK — Tesla Motors dropped in early trading on Monday due to rising doubts about Chief Executive Elon Musk's plans to take the electric carmaker private.

Shares fell 2.6 per cent to $297.55 about 20 minutes into trading, continuing the company's downward trajectory after Musk surprised markets on August 7 by announcing on Twitter he wanted to take Tesla private.

Musk said at the time he planned to take Tesla private at $420 a share. But shares have fallen more than 20 per cent since August 7. On Monday, investment bank JPMorgan Chase lowered its target on Tesla shares from $308 to $195.

Since that time, the controversial Musk has come under extensive scrutiny over his Twitter statements related to the proposal, especially a claim that Tesla had "secured" funding for the go-private transaction.

US securities regulators are reportedly probing the veracity of that and other claims. Musk acknowledged exhaustion in an extraordinary interview with The New York Times last week.

On Monday, JPMorgan said Musk's progress in taking the company private "appears much less developed than we had earlier presumed", eliminating the need for a premium based on the transaction.

While going private is "clearly possible", the latest revelations about Tesla show the company has not obtained financing and "any deal is potentially far from even being formally proposed", the JPMorgan note said.

LONDON — The plunge in the price of copper by more than 20 per cent since the beginning of June has worried analysts who see it as a bad signal for the global economy.

The red metal has acquired the sobriquet “Doctor Copper” for its ability to take the temperature of the world economy.

 Why trust Dr Copper? 

“Doctor Copper” is able to tell when the world economy is going to get sick or get better because of the ubiquity of copper in the modern world.

It is used in plumbing, heating, electrical and telecommunications wiring.

“Trains, planes and automobiles are full of copper, so too are homes and appliances,” said Russ Mould, investment director at AJ Bell.

So, it is hard to imagine economic growth without copper, and the market price of the metal reflects fluctuations in demand.

Economists at the Bank of England who monitor the global growth to set monetary policy said on their blog that for them it “is crucial to assess what is happening in the world economy in real time or ‘nowcast’ economic activity”.

Copper prices provide such a real time signal.

 How good are his diagnoses? 

Last year’s acceleration of global growth surprised the International Monetary Fund and several central banks.

The Bank of England economists noted that: “Metals prices rose 30 per cent over 2017, reflecting the continued and surprising strength of the global economy”.

It also works the other way.

“The price of copper fell steeply during the global financial crisis,” said Andrew Kenningham, chief global Economist at Capital Economics.

“And if it continues for much longer, the latest leg down will begin to look ominous.”

But copper prices aren’t a foolproof signal as they are also due to supply factors.

“Copper prices are driven not only by physical demand but also by supply shocks, speculation and exchange rate movements,” said Kenningham.

As copper is traded in dollars, when the value of the Chinese yuan or other emerging market currencies fall it becomes more expensive, dampening demand and pulling the price of the metal lower.

What is behind current weakness? 

On Wednesday, shares and raw materials prices tumbled as global trade tensions ratcheted higher and emerging market currencies fell against the dollar.

Three-month copper futures prices, which were over $7,200 per tonne in early June, struck a 13-month low of $5,773 per tonne.

“Copper prices have collapsed as concerns over trade tariffs” increased wrote analysts at ANZ banking group.

Some analysts believe the current lack of appetite for risk assets was presaged by the drop in copper prices.

“Copper is widely considered to be a bellwether for the global economy and so a weak price is cause for concern” said Mould at AJ Bell.

CARACAS — Venezuela's President Nicolas Maduro announced on Friday a single exchange rate pegged to his socialist government's petro cryptocurrency, effectively devaluing by 96 per cent in a move economists said would fan hyperinflation in the chaotic country. 

In one of the biggest economic overhauls of Maduro's five-year government, the former bus driver and union leader also said he would hike the minimum wage by over 3,000 per cent, boost the corporate tax rate, and increase highly-subsidized gas prices in coming weeks.

"I want the country to recover and I have the formula. Trust me," Maduro said in a nighttime speech broadcast on state television.

But economists expressed doubts that Venezuela's cash-strapped government, which faces US sanctions and has defaulted on its bondholders, would succeed.

Venezuelans will see their meager salaries further eroded and companies will struggle with major increases to both taxes and the minimum wage, they said. 

"Amid this aggressive devaluation and monetary expansions due to salaries and bonuses, we are expecting a much more aggressive stage of hyperinflation. All the more so in a context where the elimination of excessive money printing is not credible. The worst of all worlds," said Venezuelan Economist Asdrubal Oliveros of consultancy Ecoanalitica.

The International Monetary Fund has predicted that inflation in Venezuela would hit one million per cent this year.

After a decade-long oil bonanza that spawned a consumption boom in the OPEC member, many poor citizens are now reduced to scouring through garbage to find food as monthly salaries amount to a few US dollars a month. 

'Petrolising'

Maduro said he would overhaul Venezuela's disparate exchange rates and peg salaries, pensions and prices to the petro, a cryptocurrency launched by the government earlier this year.

It was not immediately clear how the government intended to carry out the financial changes and the I

information ministry did not respond to a request for details.

Cryptocurrency experts have cast doubt on the petro as a functional financial instrument, citing a lack of clear details on how it operates and US sanctions that make it off limits.

President Donald Trump in March signed an executive order barring any US-based financial transactions involving the petro, with officials warning that the Venezuelan cryptocurrency was a "scam".

Venezuela's government has not provided a clear breakdown of petro investors or how much they have collected from the cryptocurrency's sale.

Maduro argues that he is the victim of a Washington-led "economic war" designed to sabotage his administration through sanctions and price-gouging. He has vowed that the petro will abolish the "tyranny" of the dollar and lead to an economic rebirth in Venezuela, home to the world's biggest crude reserves.

Economists, however, point to Venezuela's strict currency controls, botched nationalizations and excessive money creation as the root causes of its economic crisis.

Maduro said on Friday that one petro would equal $60 and have the equivalent of 360 million bolivars. That implies a new exchange rate of 6 million bolivars per dollar, broadly on par with widely used black market exchange rates, entailing a 96 per cent devaluation compared with the current official DICOM rate of 248,832 bolivars per dollar.

"They've dollarised our prices. I am petrolising salaries and petrolising prices," Maduro said. "We are going to convert the petro into the reference that pegs the entire economy's movements".

Maduro added that the minimum wage would amount to "half a petro," baffling some Venezuelans and sparking the Twitter hashtag #BlackFriday.