No sooner had we recovered from the Brexit a new resonance event shocked the public and the foreign exchange market. Surely it is reffered to the Turkey coup attempt.
What has happened?
Late on Friday evening, the military appeared on the streets of Istanbul and Ankara, gunfire and explosions rocked, the attacks on government buildings began. Military helicopters of rebels were flying in the sky over the Ankara. The rebels blocked the bridge over the Bosphorus.
The rebels announced a martial law, curfew and the preparation of a new constitution. Their actions were under the slogan of defending democracy from the illiberal policy of the Turkish President Recep Erdogan.
The Prime Minister announced the military coup attempt on television. The president, who was on vacation, called his compatriots to get out on the streets and to rebut the rebels. As a result of police and civilian actions the coup was strangled during the night. The rebels did not have the support of the people and arms and early on Saturday morning they began to lay down their arms.
On Saturday, police seized about 1500 people and renewed control over all military bases and key facilities.
Who is guilty?
The government has accused the Turkish preacher Fethullah Gulen, who is now in the United States, of fomenting unrest. But he denied the accusations and condemned the coup attempt.
Recently, the Islamic politics of president has caused the disapproval of the military, who sought to save the secular state.
The secular state is a form of government in which religious beliefs do not affect the adoption of laws and policies of the authorities. Citizens of all faiths have equal rights and duties. At the moment, the majority of Muslim countries do not meet the criteria of secularism.
But as in the last two years the president “cleaned” army regularly, we are not talking about the opposition of all armed forces, rather about the confrontation of some particular faction.
According to the government, the coup gave an excellent cause for undertaking a global army cleaning from all the dissidents or suspected.
What are the consequences?
According to the latest data – there are about 290 dead, including civilians, 6000 arrested, 2 downed helicopters, destroyed parliament building in Ankara.
To control the order 1800 special forces were repositioned in Istanbul and the control was tightened on the streets significantly.
The leaders of other countries expressed dismay about the situation and support for the current government. This concern is not a formal, as the Turkish army is the basis of NATO’s military forces, the second in the alliance. The heads of the US, the UK, Germany and other countries called its citizens to respect the democratic system in Turkey, keep calm and if possible to refrain from trips to Turkey. Some national airlines even canceled flights to Turkey.
How the foreign exchange market responded
The Turkish lira has weakened considerably due to the above events. According to the XE.com lira fell by 145 points in a blink in TRY/EUR currency pair. Later, the Turkish currency stabilized a little, but did not return the initial position.
The USD/TRY currency pair reacted strongly – a drop to 166 pips, which was followed by a lull on the weekend and growth to the level of 0.33828.
The situation in Turkey, along with other events of the past few weeks, shows the prevailing geopolitical crisis and global instability. Unpredictability complicates fundamental analysis extremely and increases the risks on the exchange market. Be careful!