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Turkish currency plummets as Trump stokes turmoil with new tariff threat

11 August, 2018, 20:37 | Author: Sara Gill
  • The euro has dropped today after the Turkish lira ad Russian rouble plummeted

President Donald Trump said Friday he has green-lit a doubling of steel and aluminum tariffs on Turkey and warned that relations between the U.S. and Turkey "are not good at this time", a move that comes amid USA efforts to increase pressure on Ankara to secure the release of an American pastor.

"Unless the United States starts respecting Turkey's sovereignty and proves that it understands the dangers that our nation faces, our partnership could be in jeopardy", the Turkish president stated.

The lira's plunge is one of the most serious economic crises that Erdogan has faced since coming to power in 2003 in the wake of a financial crisis in 2001 that brought the economy to near meltdown.

Turkey's woes shook world markets, pushing down stock indexes and lifting the dollar, which traders around the world typically buy in times of concern.

He did not offer an explanation for the tariff hike, which raises the tariffs to 20 percent on aluminum and 50 percent on steel, though there are a couple of possibilities.

The US president revealed the action on Friday as he noted how the Turkish lira "slides rapidly downward" against the "very strong" US dollar.

"Our relations with Turkey are not good at this time!" he added.

An important emerging market, Turkey borders Iran, Iraq and Syria and has been mostly pro-Western for decades.

The euro zone bank sell-off was also exacerbated by a report in the Financial Times that the European Central Bank is increasingly concerned about some lenders, particularly BBVA of Spain, UniCredit of Italy and BNP Paribas of France as they have some of the largest operations in Turkey among euro zone banks.

Later speaking in northeastern Rize province, Erdogan spoke of Turkey's plans to trade in local currencies with some countries.

Ankara blames for an attempted coup in 2016.

"This innocent man of faith should be released immediately", Trump previously wrote on Twitter when it became clear Turkey would not release the evangelist, who was ordered to be held under house arrest.

That turned into a rout on Friday, with the lira diving more than 18 percent on the day and more than 40 percent this year to a new record low after Trump took steps to punish Turkey in a wide-ranging dispute.

There are now fears the weakening lira will see Turkish companies that borrowed heavily in the country's construction boom struggle to repay loans in dollars and euros.

"This will be my people's response to those who have waged an economic war against us", he said.

Turkey and the U.S. are now experiencing rocky relations following Washington's imposition of sanctions on Interior Minister Suleyman Soylu and Justice Minister Abdulhamit Gul for not releasing Brunson. "This is a national, domestic battle", he said.

US officials have said the courts would require sufficient evidence to extradite the elderly Gulen, who has denied any involvement in the coup. Since the last financial crisis, Turkey has posted impressive growth figures but over recent years this growth has been accompanied by increasing debt. It is obvious how it will be done: "since the final decision-maker of all policies in the new regime is the president, the responsibility of regaining confidence is on his shoulders".

"I don't think foreign banks will be willing to lend to Turkish banks".

Investors quickly made up their minds, with the Lira sliding 5pc during his 15-minute speech, and then slumping even further in the afternoon, again signalling the deep concern about the stewardship of the economy under Mr Erdogan and Mr Albayrak, his son-in-law and newly appointed Finance Minister.



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