Turkey’s money problems. Turkey may have less foreign reserves than its central bank has let on. Turkish officials claimed just prior to municipal elections that the decline in reserves in late March was expected because of the central bank’s sale of foreign currency to firms that needed dollars to import energy. But according to a Financial Times report published Wednesday, the decline in reserves is more severe than initially thought. To ensure Turkey doesn’t sink under its mounting foreign currency-denominated debt, the Turkish central bank borrowed billions of dollars in short-term money. As of April 8, the bank’s short-term dollar-denominated borrowing reached $13 billion, even though previously it had never exceeded $500 million. In other words, Turkey is borrowing dollars to increase its reserves and offset its dollar-denominated debt. Excluding the dollar purchases, Turkey’s net foreign assets totaled $11.5 billion through April, compared to $28.7 billion at the beginning of March.

Russia’s exports to Ukraine. A week after Ukraine expanded the list of restricted imports from Russia, Moscow responded by banning certain goods from being exported to Ukraine. Russian Prime Minister Dmitri Medvedev announced Thursday that Russia will ban the export of oil and oil products to Ukraine. Starting June 1, these goods can be sold to Ukraine only under strict circumstances. According to official figures, Russia delivered 606.7 tons of oil and oil products to Ukraine in 2018. Russia will also expand the list of Ukrainian goods banned from import to Russia.

Concerns over U.S. law. The Trump administration has announced that it will enforce the Helms-Burton Act, which allows lawsuits against businesses linked to property seized from American firms in the Cuban Revolution, for the first time since the act’s passage in 1996. Companies from the European Union (particularly Spain) and Canada that operate in Cuba are concerned they could be subject to lawsuits in the United States, and both the EU and Canada have vowed to retaliate if this happens. In practice, it would take years to file claims and bring cases to trial. But the timing of the U.S. announcement is potentially significant, coming as it does just days after the EU said it was ready to start trade talks with Washington. Canada, meanwhile, has yet to ratify the U.S.-Mexico-Canada Agreement. It’s likely that this move will complicate future trade talks.

Bad news for Germany. The IHS Markit Purchasing Managers’ Index for German manufacturing rose from 44.1 points to 44.5 in April, below the predicted 45 points in a Reuters poll of economists and well below 50, the dividing line between growth and contraction. This follows German Economic Minister Peter Altmeier’s announcement on Wednesday of another downward revision of the 2019 economic growth forecast to 0.5 percent from 1 percent. As recently as December 2018, Berlin had been expecting 1.8 percent growth in 2019. Altmeier and the influential Federation of German Industries, or BDI, have called for corporate tax cuts, but Finance Minister Olaf Scholz instead has drawn up plans for 1.27 billion euros’ ($1.43 billion) worth of incentives annually to support business research and development, beginning next year, according to Reuters. (The BDI also encouraged the government to incentivize investments in green technology.) There was a notable positive indicator earlier this week, when the ZEW index, a measure of investor confidence, rose for the sixth straight month to its highest level since March 2018.

Honorable Mentions

  • In talks over U.S.-Japan trade, U.S. negotiators agreed to settle for Japanese agriculture tariffs being lowered to levels set for members of the Trans-Pacific Partnership after previously demanding deeper cuts.
  • Iran is cracking down on shell companies accused of receiving subsidies in foreign currency from the Iranian government without reporting it. As the rial fell last year, the subsidy was created to support importers of staple goods.
  • Iran and Oman held joint naval drills. Tehran also announced that it would lead joint naval exercises involving unnamed Indian Ocean littoral states at an undisclosed date.
  • During a visit to Northern Ireland, U.S. House Speaker Nancy Pelosi again said that a U.S.-U.K. trade deal would not occur if Brexit results in a hard border in Ireland, as would be the case in a no-deal exit.
  • British retail sales surged by 6.7 percent year on year in March, helped in part by bad weather in March 2018 that suppressed that month’s figure. The month-on-month increase was 1.1 percent.
  • North Korea said it conducted a “new tactical guided weapons firing test” but declined to provide much more detail. It’s probably not something that will affect negotiations with the U.S.
  • Iraqi Prime Minister Adel Abdul Mahdi visited Saudi Arabia on Wednesday, his first trip to Riyadh since taking office. The visit comes just two weeks after Saudi Arabia reopened its consulate in Baghdad, which had been closed for 30 years, and announced $1 billion of investment in Iraq. The prime minister has insisted on maintaining ties with both Iran, which he also visited earlier this month, and Saudi Arabia, which sees Iran as a rival.
  • On Wednesday, Tripoli experienced the worst fighting since east Libyan forces, led by Khalifa Haftar, moved to take the capital earlier this month, according to the United Nations. The U.N. Security Council has been debating a resolution to call for a cease-fire in the war-torn country, though Russia has objected to the way it’s worded.
  • The Argentine government ordered a freeze on prices of basic goods and public services after the 12-month inflation rate reached 54.7 percent. The Central Bank also froze the range for currency exchange rates, setting the floor at 39.75 pesos per dollar and ceiling at 51.45 pesos per dollar.