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Turkish lira slumps to new record low as Donald Trump doubles tariffs

11 August, 2018, 20:35 | Author: Kristi Dunn
  • Greek lieutenant Aggelos Mitretodis and noncommissioned officer Dimitros Kouklatzis were arrested in Turkey

Turkey was facing artificial financial volatility, Erdogan said, and people should not pay close attention to foreign exchange prices, and should instead focus on the "big picture".

"As he stated, the president has authorized the preparation of documents to raise tariffs on imports of steel and aluminum from Turkey", White House Deputy Press Secretary Lindsay Walters said.

In a tweet, he said he was imposing duties of 20 per cent on Turkish aluminium and 50 per cent on steel.

This is double the level the president imposed on a range of countries earlier this year, including European Union member states.

Turkey has defied the United States on several fronts.

Erdogan said the two countries have been strategic partners and North Atlantic Treaty Organisation allies for six decades and reminded Washington that Turkey and the United States "stood shoulder to shoulder against common challenges during the Cold War and its aftermath".

The numbers have been sliding ever since President Erdogan's election victory in June, with concerns among foreign investors about his control of monetary policy as well as the birth of Turkey's new presidential republic.

Trump intensified the alarm on financial markets with his new tweet doubling the tariffs, noting for good measure the lira was sliding "rapidly downward against our very strong Dollar!".

Friday saw the lira's value falling over 15 percent, bringing the decline to over 40 percent since the beginning of the year. So far they have remained conspicuously quiet, deciding not to step in and fight against the recent currency weakness.

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Q: How is the fall in the lira a problem?

Adding to investors' concerns, Erdogan pledged a continuation of his debt-fueled construction policy to boost the economy, which is blamed for Turkey's rampant inflation and has added to currency weakness.

Meanwhile, investors are anxious about the economic policies of President Recep Tayyip Erdogan, who won a new term in office in June with sweeping new powers. "Don't worry", Erdogan told a crowd in the northeastern city of Bayburt.

The president's characteristic defiance in the face of a shaky economy has further unnerved investors. Inflation increased 16 percent in July, and Erdogan has insisted that interest rates not increase. If it fell much further, it might push a lot of Turkish banks and businesses that had borrowed in dollars into bankruptcy - assuming they did not get bailed out first.

The Turkish unit of currency, the lira, has been dropping due both to the policies of Turkish President Recep Tayyip Erdogan and that country's souring relationship with the United States.

Markets InsiderAs a result of the ensuing panic, the dollar strengthened sharply against major currencies as global investors sought a safe-haven, something that runs directly against Trump's professed efforts to boost U.S. manufacturing production and exports.

Turkey has accused Andrew Craig Brunson of spying and "committing crimes on behalf of terror groups without being a member". He is facing up to 35 years in prison if found guilty of supporting the unsuccessful coup to overthrow President Recep Tayyip Erdogan in 2016.

The Treasury Department targeted Turkey's justice and interior ministers with financial sanctions last month after the government refused to allow Brunson to return to the U.S.

Washington is in a standoff with Ankara over the imprisonment and house arrest of American pastor Andrew Brunson. "Relations with countries who behave like this have reached a point beyond salvaging". These include places "from Iran, to Russian Federation, to China and some European countries", he said.

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