Erdogan tells Turks to buy crumbling lira as Trump turns the screws

12 August, 2018, 10:53 | Author: Myra Gill
  • The lira went into free-fall sinking more than 10 percent

President Donald Trump said on Friday that he has authorised the doubling of steel and aluminium tariffs "with respect to Turkey".

And so he announced he is going to double the steel and aluminum tariffs on them to make up for the fact "their currency" has slid so "rapidly downward against our very strong Dollar!"

In an opinion article published in the New York Times on Saturday, Erdogan wrote that Turkey and the USA had been strategic partners and North Atlantic Treaty Organisation allies for the past six decades and that his country had repeatedly come to America's aid.

Turkey and the US are now experiencing rocky relations following Washington's imposition of sanctions on Interior Minister Suleyman Soylu and Justice Minister Abdulhamit Gul for not releasing American Pastor Andrew Brunson, who faces terrorism charges in Turkey.

"It's pretty remarkable how far the Trump administration is willing to go - putting at jeopardy the relationship with a North Atlantic Treaty Organisation ally over a preacher".

While Turkey's economy is only the 17th largest in the world, there are a number of concerns that Trump's latest trade war is only further disrupting global commerce, damaging longtime alliances, and threatening global economic growth.

Turkish President Recep Tayyip Erdogan said at a rally in the city of Rize on Saturday that Ankara is ready to trade with its partners in national currencies.

The lira tumbled about 10 per cent on Friday to another record low as investors worry about Erdogan's unorthodox economic policies and USA sanctions.

"This is a national, domestic battle". "This will be my people's response to those who have waged an economic war against us".

Last week, he called on Turks to convert their foreign currency and gold into Turkish lira to help the currency.

Mr Trump has castigated Turkey for detaining American pastor Andrew Brunson, who is on trial for terrorism charges for allegedly associating with plotters of the failed 2016 coup against Mr Erdogan.

The added weakness in Turkish currency - that has seen it plunge a further 10% - comes as disappointment set in after talks between Turkish and U.S. diplomats in Washington failed to result in a compromise that was likely to ease sanctions.

Early on Friday, the lira hit a new record low, plunging to as far as 6 per United States dollar after a Turkish delegation returned from talks in Washington on Thursday with no apparent solutions to an ongoing crisis.

"They say we will not give this or that. Don't heed them", Erdogan said Thursday.

The economic options include a central bank intervention by raising interest rates, although this would have a temporary effect, and Erdogan is famously hesitant to raise rates.

The prospects for Albayrak being able to pursue an independent economic policy to safeguard the autonomy of the Central bank do not appear good.

"If there are dollars under your pillow, take these out", he told supporters in the north-eastern Turkish town of Ünye.

The ailing Turkish lira had already lost one third of its value this year, largely over worries about Erdogan's wider control of the economy.

But Erdogan, who had remained unusually silent until now as the lira crisis mounted, urged Turks to take matters into their own hands.

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

He also cited the Turkish invasion of Cyprus as an example of his country's willingness to protect its interests when the United States "refuses to listen".

In the worst case scenario of the collapse of a European bank, there could be "contagion" - other countries and banks, including those in Britain, may be imperilled - raising the spectre of the economic turmoil that followed the 2008 global banking crisis.


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