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Biden’s admission of the Armenian genocide puts the Turkish lira and stock exchange in a difficult situation

Biden’s admission of the Armenian genocide puts the Turkish lira and stock exchange in a difficult situation

US President Joe Biden admitted, on Saturday, the Armenian genocide as a genocide, as it coincided with its 106th anniversary yesterday at the hands of the Ottoman EmpireBiden’s predecessors in the White House had refrained from using the word

genocide

, fearing it would damage relations with Turkey.

But Biden said it bluntly:

We remember the lives of all those who died in the Armenian Genocide in the Ottoman era.

Perhaps fortunately for Turkey, global stock exchanges close their doors on Saturday and Sunday, which prevented the lira from falling significantly alongside the main Istanbul Stock Exchange index, but expectations for a decline at the beginning of weekly trading, MondayThe Turkish lira is highly sensitive to foreign political events and developments affecting the local political situation, as a decline in the local currency exchange rate – already retreating – is expected at the beginning of tomorrow’s trading, Monday.

Biden’s statements are expected to follow tensions in the relationship between Washington and Ankara, which means an increase in political risks that cast a negative shadow over the stability of the Turkish economy, and a decrease in the confidence of Turks and foreigners in the local market in the lira.

The possible decline in morning trading on Monday, as a result of widespread selling of the local currency, matched by the purchase of foreign exchange, most notably the US dollar and the European euro, and to a lesser extent, directed towards gold, as safe tools to preserve the value of cash.

Also, based on previous experiences between Turkey and the United States during the era of former President Donald Trump, it is likely that large selling operations will be carried out in the Turkish stock market (Istanbul Stock Exchange), which could pave the way for a decline in the main index.

At the end of last week’s session, the Turkish lira recorded its lowest level in nearly 4 weeks against the US dollar, to 837 per dollar, which is the lowest level of the local currency since the date of March 30It is noteworthy that the most prominent decline in the lira during the past five years was on August 9, 2018, when a diplomatic dispute occurred between Ankara and Washington over the Turkish police arresting an American priest on charges of espionage.

At that time, the Turkish lira retreated from an average of 49 per one dollar to roughly 724 liras per dollar; Although the diplomatic row was resolved, the lira did not improve, and at the end of last year it reached 853 per one dollarOn Saturday, CNN reported that Biden told his Turkish counterpart, Recep Tayyip Erdogan, of his plans to recognize the massacre, as genocide, in a call last Friday, according to a person familiar with the conversation.

Friday’s readings from the White House and the Turkish presidency did not mention the discussion of the 1915 massacre, although Biden and Erdogan’s call was described by a person familiar with it as

tense.

Biden’s admission of the Armenian genocide puts the Turkish lira and stock exchange in a difficult situation
Biden’s admission of the Armenian genocide puts the Turkish lira and stock exchange in a difficult situation