US visa suspension leads to fall of Turkish lira and Istanbul borse

The Turkish lira and the Istanbul borsa fell today, after the US suspended processing of most of the new visas in Turkey.

The US temporary decision puts the Nato ally on a list of pariah states such as Iran, Libya and most recently North Korea, as more citizens of the area face restrictions on travel to the US.

The lira went down by as much as six per cent in overnight trading, hovering at around four to the dollar in the afternoon. The Borsa Istanbul 100 Index fell by 4.7 per cent last night, recovering to about 3.2 per cent this afternoon. Despite the loss, the Borsa is still similar to the record highs of the past few months.

The US sanction came after a second embassy employee in Turkey was arrested and local pro-government newspapers leaked photos, home addresses and evidence supposedly showing links between employees and hundreds of exiled Turkish prosecutors who had run an anti-corruption investigation that went on to almost topple the government in 2013.

They were later accused of fabricating evidence and eventually fled the country.

Tusiad, a leading Turkish business group, asked for diplomacy as other banks deemed foreign exchange liquidity to be an “adequate” reaction.

The Turkish government also released a similarly worded statement, claiming that it is now suspending new US non-immigrant visa applications.

US and Turkish government have been rising for some time, as the bitter relationship between the two countries affected relations between the US embassy in Turkey and the Turkish government.  Turkish officials and pro-government newspapers have regularly accused US diplomats and their colleagues of acting as propaganda in favour of terrorist groups.

It will be difficult for [President] Erdogan to back down and cancel the detention warrants of the US personnel without suffering a further blow to his ... domestic prestige,” Wolfango Piccoli, at UK-based consultancy Teneo Intelligence said.