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Turkish Markets Tumble as Diplomatic Row With U.S. Escalates

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Turkey Military Coup
  • Turkish Markets Tumble as Diplomatic Row With U.S. Escalates

Turkey’s markets took a hammering amid a deepening standoff between President Recep Tayyip Erdogan’s government and the U.S.

The lira, stocks and bonds tumbled, while the cost of insuring Turkish credit against a default rose after the two NATO members suspended visa services for each other’s citizens.

The selloff underlined Turkey’s vulnerability as the prospect of U.S. interest-rate increases saps demand for some emerging-market assets, rising oil prices boost the country’s import costs and the government gets increasingly sucked into the conflict in neighboring Syria.

“This row just adds to all the other concerns people have about Turkey,” Simon Quijano-Evans, a strategist at Legal & General Investment Management Ltd. in London, said by telephone. “It’s not going to trigger an EM-wide contagion, because every market is idiosyncratic. But it does show that political risk is a concern for investors.”

The lira traded 2.2 percent weaker at 3.6956 per dollar as of 12:46 p.m. in Istanbul. The yield on the nation’s 10-year bonds surged 28 basis points to 11.37 percent. The cost of insuring Turkey’s sovereign debt for five years climbed seven basis points to 184 basis points.

The Borsa Istanbul 100 Index fell 3.6 percent, the biggest retreat in more than a year, declining below 100,000 points for the first time since June 21. Shares of national carrier Turkish Airlines declined as much as 11 percent.

Earlier in Asian trading, the dollar surged as much as 6.6 percent against the lira as markets in Japan, South Korea and Taiwan were closed for holiday. The Turkish currency’s plunge caused live-platform pricing to be turned off and restricted the availability of quotes. As volatility escalated, requests for quotes on “show side only” basis were flashing, according to traders familiar with the transaction who asked not to be identified because they aren’t authorized to speak publicly.

The currency market has faced bouts of extreme volatility during early Asian trading hours, including the pound’s flash crash a year ago as well as the South African rand’s plunge in January 2016. While the lira is a volatile developing-nation currency with thinner trading, Monday’s decline is a reminder of the underlying fragility of the $5.1 trillion-a-day foreign exchange market.

“Almost certainly the liquidity is a significant issue in the price action,” said Andrew Bresler, deputy head of sales trading for Asia Pacific at Saxo Capital Markets Ltd. in Singapore. “This is always the problem with negative news events in early Asia trading timezone. Fewer market participants will exacerbate the move.”

As news broke that the spat between Turkey and the U.S. had intensified, the bid-offer spread in prices offered by interbank market makers blew out to 60 times the average, highlighting the costs of doing business in emerging-market FX.

In the options market, the premium to buy one-month calls on the dollar against the lira relative to puts surged 53 basis points to 264 basis points, the highest since July.

The U.S. and Turkey said in separate statements that recent events had forced them to “reassess the commitment” of the other to the security of mission facilities and personnel. The moves followed the arrest of a Turkish national who works at the U.S. consulate in Istanbul for alleged involvement in the July 2016 coup attempt against Erdogan.

Erdogan boarded a plan for a scheduled trip to Kiev, skipping an expected statement to the press.

Is the CEO/Founder of Investors King Limited. A proven foreign exchange research analyst and a published author on Yahoo Finance, Businessinsider, Nasdaq, Entrepreneur.com, Investorplace, and many more. He has over two decades of experience in global financial markets.

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Netanyahu Stands Firm as US Halts Bomb Shipment Over Rafah Invasion Warning

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Amidst escalating tensions between Israel and the United States, Israeli Prime Minister Benjamin Netanyahu has adopted a defiant stance following the US decision to halt a shipment of bombs and warned against Israel’s potential invasion of the southern Gaza city of Rafah.

In a bold statement, Netanyahu declared, “If we have to stand alone, we will stand alone,” emphasizing Israel’s resolve to pursue its objectives despite opposition.

The Prime Minister’s comments, delivered via social media and a subsequent interview with American talk show host Dr. Phil, underscore Israel’s determination to address security threats posed by the Gaza Strip, particularly by Hamas militants operating in Rafah.

Netanyahu reiterated the necessity of military action in Rafah to eliminate the remaining Hamas battalions, condemned Hamas’s history of violence and reiterated Israel’s commitment to achieving victory and ensuring the safety of its citizens.

The US administration, led by President Joe Biden, expressed concerns over the potential humanitarian impact of an Israeli invasion of Rafah, prompting the decision to withhold additional offensive weapons shipments to Israel.

Biden’s statement echoed broader international apprehensions about the escalation of violence and civilian casualties in the conflict-stricken region.

However, Netanyahu remained resolute in Israel’s approach, asserting the country’s right to defend itself against security threats. He emphasized Israel’s efforts to minimize civilian casualties and facilitate the evacuation of civilians from Rafah before any military action.

Despite the US’s decision to pause the bomb shipment, Netanyahu affirmed Israel’s commitment to its longstanding alliance with the US. He acknowledged past disagreements between the two nations but expressed optimism about resolving current tensions through dialogue and cooperation.

In response, White House officials reiterated the US’s support for Israel’s security while urging restraint and emphasizing the need to avoid actions that could exacerbate the humanitarian crisis in Gaza.

The administration clarified that the decision to halt the bomb shipment was aimed at preventing potential civilian casualties in Rafah.

The confrontation between Israel and the US underscores the complexity of navigating regional conflicts and balancing strategic interests. As tensions persist, both nations face the challenge of reconciling their respective security imperatives with broader humanitarian concerns, seeking to avert further escalation while addressing the root causes of the conflict in the Middle East.

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EFCC Declares Former Kogi Governor, Yahaya Bello, Wanted Over N80.2 Billion Money Laundering Allegations

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Yahaya Bello

The Economic and Financial Crimes Commission (EFCC) has escalated its pursuit of justice by declaring former Kogi State Governor, Yahaya Bello, wanted over alleged money laundering amounting to N80.2 billion.

In a first-of-its-kind action, the EFCC announced Bello’s wanted status in connection with the alleged embezzlement of funds during his tenure as governor.

The commission, armed with a 19-count criminal charge, accused Bello and his cohorts of conspiring to launder the hefty sum, which was purportedly diverted from state coffers for personal gain.

The declaration of Bello as a wanted fugitive came after a series of failed attempts by the EFCC to effect his arrest.

Despite an ex-parte order from Justice Emeka Nwite of the Federal High Court, Abuja, mandating the EFCC to apprehend and produce Bello in court for arraignment, the former governor managed to evade capture with the reported assistance of his successor, Governor Usman Ododo.

This latest development shows the challenges faced by law enforcement agencies in holding powerful individuals accountable for their actions.

However, it also demonstrates the unwavering commitment of the EFCC to uphold the rule of law and ensure that justice is served, irrespective of the status or influence of the accused.

In response to the EFCC’s declaration, the Attorney General of the Federation and Minister of Justice, Lateef Fagbemi, issued a stern warning to Bello, stating that fleeing from the law would not resolve the allegations against him.

Fagbemi urged Bello to honor the EFCC’s invitation and cooperate with the investigation process, saying it is important to uphold the rule of law and respect the authority of law enforcement agencies.

The EFCC’s pursuit of Bello underscores the agency’s mandate to combat corruption and financial crimes, sending a strong message that individuals implicated in corrupt practices will be held accountable for their actions.

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Concerns Mount Over Security as National Identity Card Issuance Shifts to Banks

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Amidst the National Identity Management Commission’s (NIMC) recent announcement that the issuance of the proposed new national identity card will be facilitated through applicants’ respective banks, concerns are escalating regarding the security implications of involving financial institutions in the distribution process.

The federal government, in collaboration with the Central Bank of Nigeria (CBN) and the Nigeria Inter-bank Settlement System (NIBSS), introduced a new identity card with payment functionality, aimed at streamlining access to social and financial services.

However, the decision to utilize banks as distribution channels has sparked apprehension among industry stakeholders.

Mr. Kayode Adegoke, Head of Corporate Communications at NIMC, clarified that applicants would request the card by providing their National Identification Number (NIN) through various channels, including online portals, NIMC offices, or their respective banks.

Adegoke emphasized that the new National ID Card would serve as a single, multipurpose card, encompassing payment functionality, government services, and travel documentation.

Despite NIMC’s assurances, concerns have been raised regarding the necessity and security implications of introducing a new identity card system when an operational one already exists.

Chief Deolu Ogunbanjo, President of the National Association of Telecoms Subscribers, questioned the rationale behind the new General Multipurpose Card (GMPC), citing NIMC’s existing mandate to issue such cards under Act No. 23 of 2007.

Ogunbanjo highlighted the successful implementation of MobileID by NIMC, which has provided identity verification for over 15 million individuals.

He expressed apprehension about integrating the new ID card with existing MobileID systems and raised concerns about data privacy and unauthorized duplication of ID cards.

Moreover, stakeholders are seeking clarification on the responsibilities for card blocking, replacement, and delivery in case of loss or theft, given the involvement of multiple parties, including banks, in the issuance process.

The shift towards utilizing banks for identity card issuance raises fundamental questions about data security, privacy, and the integrity of the identification process.

With financial institutions playing a pivotal role in distributing sensitive government documents, there are valid concerns about potential vulnerabilities and risks associated with this approach.

As the debate surrounding the security implications of the new national identity card continues to intensify, stakeholders are calling for greater transparency, accountability, and collaboration between government agencies and financial institutions to address these concerns effectively.

The paramount importance of safeguarding citizens’ personal information and ensuring the integrity of the identity verification process cannot be overstated, especially in an era of increasing digital interconnectedness and heightened cybersecurity threats.

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