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

Muriel Colon
August 11, 2018

Criticizing the state of the US relationship with Ankara, Trump announced on Twitter that he had authorized a doubling of duties on aluminum and steel imported from Turkey, making them 20 percent and 50 percent respectively.

In the New York Times, Erdogan warned Washington not to risk relations with Ankara, saying his country would otherwise look for "new friends and allies".

Last week, the United States imposed sanctions on Turkey's justice minister and interior minister for not releasing US pastor Andrew Brunson. Trump tweeted out on Friday.

On Friday, Mr Erdogan also held a telephone call with Russian President Vladimir Putin, with the pair discussing economic ties between their two countries.

That indicates that people are buying dollars and euros, not selling them off - and that they're not finding buyers in lira, anyway.

"This is a national, domestic battle".

But Erdogan downplayed the currency crisis, advising Turks to show solidarity by converting any stashed-away gold or foreign currency to Turkish lira in a bid to wage a "war of independence" against America.

President Trump and Turkish President Recep Tayyip Erdogan appear in the Roosevelt Room of the White House on May 16, 2017.

Turkish newspaper Hurriyet and other media reports quote Erdogan as making the comment to a group of worshippers following traditional Muslim Friday prayers during a visit to the northern city of Bayburt.

Turkey's currency fell Friday after its economy was rattled by the United States' move to slap the country with more tariffs.


In addition, foreign investors are disquieted by Erdogan's authoritarian government, which seems to be pursuing imprudent and politically charged economic policies which undercut the independence of the central bank - only worsening Turkey's economic predicament.

In addition to the Brunson case, Washington is seeking the release of three locally employed US embassy staff. "We are knowledgeable with justice and law", Erdogan said in his address in the Black Sea province of Ordu.

Far worse than that, though, is this has also sent Turkey's currency on a downward spiral that threatens to destroy its entire economy.

"Before it is too late, Washington must give up the misguided notion that our relationship can be asymmetrical and come to terms with the fact that Turkey has alternatives".

The US has demanded the release of Andrew Brunson and on Friday doubled tariffs on steel and aluminium imports.

"This will be the response to those who have declared an economic war", he said, blaming Turkey's woes on what he described as an "interest rate lobby" seeking to push the country to higher rates. The U.S. responded by slapping sanctions on Turkey and threatening more. Hard currency debt issued by Turkish banks suffered similar falls.

Foreign investors could be spooked and try to pull their money out, reinforcing the currency drop and potentially leading to financial instability.

"The price of the food that I buy increases day by day, the fuel that I put in my auto to distribute lunches is more expensive, but I can not raise my prices from one day to the next, " she said. At one point, it was down as much as 19 percent on the day, before rallying a bit to bring it to "only" a 13.7 percent loss.

Erdogan has cast the recent slide in the lira as a war and without naming countries said supporters of a failed military coup two years ago, which Ankara says was organized by a US -based Muslim cleric, were attacking Turkey in new ways since his re-election two months ago.

"Most of the actors in the Washington scene think that carrots just don't work with Turkey, just the stick", said political analyst Atilla Yesilada of Global Source Partners.

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