Despite the economic challenges facing Turkey that have sent the lira on a dramatic fall, the country remains a “great” market that BNP Paribas has no intention of exiting, the French bank’s chairman said on Friday.
“Turkey is a great country, it’s a great economy,” Jean Lemierre, the chairman of BNP Paribas, told CNBC’s Nancy Hungerford and Mandy Drury at the annual Singapore Summit.
“We should calm down all these comments. Turkey is great. They face difficulties, I hope and I’m sure they know how to face the difficulties,” he said in response to a question about whether the bank would consider pulling out of Turkey given that many challenges the country faces won’t go away anytime soon.
BNP Paribas has one of the largest exposures to Turkey among European banks, according to Reuters, which cited one investment in particular: The French lender controls 72 percent of the Economy Bank of Turkey, partly through a local joint venture.
Turkey’s troubles came into the limelight last month after the lira depreciated sharply. The country’s central bank on Thursday increased interest rates by 6.25 percentage points to 24 percent in an attempt to stem further declines in its currency. According to Lemierre, that was the right move to take.
“They have taken a bold, and serious, and an extremely important decision,” he said. “Turkey has to react, and they have reacted, and I think they have taken the right measures at a time when the currency was weaker and weaker.”
The problem in Turkey has exacerbated fears that an economic fallout in the country could spill over into other emerging markets at a time when investors increasingly favor American assets due to a stronger U.S. dollar.
The Russian ruble and the South African rand have been two of the biggest losers among emerging markets’ currencies, both depreciating by close to 20 percent against the U.S. dollar so far this year. In Asia, the Indian rupee and the Indonesian rupiah fell by 12 percent and 9 percent, respectively, against the greenback.
But aside from “tensions” in countries such as Turkey, Lemierre said, many emerging economies are on a sound footing.
“I do not believe that we see or we face emerging market crisis. There are tensions against some countries, we know them: Turkey, Argentina. There are tensions on some countries but this is not an overwhelming crisis, especially in Asia — I do not see any specific difficulty in Asia,” he said.
