Everybody knows that the Turkish Lira has been going south toward a crisis, but Donald Trump, President of United States made a statement through Twitter after a speech was made by Erdogan, the Turkish President which lead the Turkish Lira plunge further.

“There are various campaigns being carried out. Don’t heed them,” Erdogan said Thursday “Don’t forget, if they have their dollars, we have our people, our God. We are working hard. Look at what we were 16 years ago and look at us now,” Erdogan told supporters.

As you can see, Trump’s tweet has rubbed salt into the wound – heated up the crisis even further and caused the Turkish Lira to accelerate its decline. The Turkish Lira has then crashed as much as 20% within a few days.

It is no surprise how one statement on Twitter from world leaders can have such a huge impact on the financial markets today.

But how has it affected Singapore Stock Market?

The STI was hit by slower GDP growth and the Turkey crisis, with STI losing 39.544 points, or 1.2% to 3,245.34 on Monday, 13th August 2018.

According to The Straits Times, the three main banks – DBS, OCBC and UOB has led the market in declines with DBS retreating 39 cents, or 1.5 per cent, to $25.20. OCBC Bank fell 23 cents to $11.57, while United Overseas Bank (UOB) declined 38 cents to $27.62.

Among the key index stocks, Singapore Telecommunications shed 2.2% or S$0.07, to S$3.07.

Property developer CapitaLand lose 1.8 per cent, or six Singapore cents, to S$3.25.

Shares of Wilmar International fell six cents, or 1.9 per cent, to $3.13.

So far, the Ministry of Trade and Industry (MTI) reported that Singapore’s GDP growth was 3.9% YoY for Q2 – it was slightly higher than advance estimates of 3.8% but missed market consensus which had forecasted 4.1% growth. It was also slower compared to the growth in 1Q, which was 4.5%. In May, MTI maintains 2018 GDP growth forecast at 2.5% to 3.5%. However, this forecast has not taken into account of the Turkish Lira Crisis which happened last Thursday.

How will it affect the Singapore Dollar?

According to The Business Times, the spillover fears also dragged other emerging currencies lower, including the Indonesian rupiah. The rupiah weakened against the Singapore dollar, with one Singapore dollar worth 10,612.69 rupiah at lunchtime, 29.41 rupiah more than the previous close.

However, DBS rates strategist Eugene Leow said that Asia does not have meaningful exposure to Turkey and should not experience any contagion effect.

“Hence, the impact on Asian credits will be more from perspective of weak EM sentiment rather than fundamentals,” it added.

Despite global economic headwinds, DBS Group Research is advising investors to stick to “stronger Asian economies” with firm external balance sheets and fiscal balances such as China and Singapore.

A strong Singapore Dollar can help to reduce inflationary pressures and prevent the economy from overheating. This will also incentivise Singapore to cut costs and increase in productivity and diversify into less price sensitive exports. This could lead to long term benefits for Singapore’s economy rather than competing with large exporting countries like China. If Singapore were to rely on a weaker currency, Singapore might lose out to its competitors in terms of exporting goods.