Foreign investors in Turkey face squeeze

February 25, 2014 15:29

LONDON/VIENNA - Foreign investors in Turkey are beginning to feel the effects of a sagging currency, rising inflation and a growing political power struggle, adding to fears the country may not be the source of future growth that some companies had hoped.

Like other developing economies, Turkey has been battered in recent months by US Federal Reserve plans to reduce its monetary stimulus. This had allowed financial investors to borrow cheaply in the United States and invest in high yielding securities in faster growing, lesser developed economies.

But Turkey has been hit particularly badly by a power struggle between Prime Minister Tayyip Erdogan and an Islamic cleric he accuses of concocting a corruption scandal in an attempt to undermine him.

Turkish assets fell on Tuesday after the internet posting of an audio tape suggesting Erdogan had connived with his son in graft. The Prime Minister called the tape a fake and part of a conspiracy against his country.

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