Turkey's finance chief: Action plan ready to ease markets

13 August, 2018, 04:38 | Author: Myra Gill
  • The Turkish government has promised to announce a “new economic model” today amid fears that the International Monetary Fund would have to be called

It hit a record low after Trump announced he had authorised higher tariffs on imports from Turkey, imposing duties of 20% on aluminium and 50% on steel.

The lira, which had already lost one-third of its value this year largely over worries about Erdoğan's wider control of the economy, is at a fresh record low, at one point losing 18%, its biggest fall since 2001.

The diplomatic dispute with the USA was one of the triggers for the turmoil this week.

Mr Erdogan has linked Gulen's fate to that of American Christian pastor Andrew Brunson, who is on trial in Turkey on terrorism charges for allegedly supporting a group that Ankara blames for the failed coup.

Iran's Foreign Minister Mohammad Javad Zarif waded into the mounting row by accusing Washington of having an "addiction to sanctions and bullying". Trump said on Twitter.

The embattled lira tumbled 16 percent against the dollar on Friday, with US President Donald Trump saying he had doubled steel and aluminium tariffs on Turkey in comments that contributed to the currency's further slide.

Turkey's embattled lira on Friday hit new record lows against the U.S. dollar and euro, losing over seven percent in value as strains with the United States showed no sign of abating and fears grew over the exposure of European banks.

In the last two years, the Turkish government has increasingly used the detainment of people with USA or dual citizenship to try to force the United States to give into its demands.

Trump's action on Friday indicates he is willing to use his presidential powers as an economic and diplomatic weapon, even against allies, the Wall Street Journal reported.


In what appears to be a diplomatic riposte, Turkey later said Erdoğan had held a phone call with Russian president Vladimir Putin to discuss economic ties, suggesting it might gravitate further away from its North Atlantic Treaty Organisation allies toward cooperation with Russia, whose relations with the west are at their lowest since the cold war.

Turkey has already retaliated by making its commitment to its North Atlantic Treaty Organisation membership ambiguous.

Turkey will "never accept the order, which declares war against the whole world", through the threats of sanctions, he said, referring to the U.S.

But Erdogan said Turks should not be alarmed by exchange rate movements.

New Finance Minister Berat Albayrak - Erdogan's son-in-law - acknowledged that the central bank's independence was critical for the economy, promising stronger budget discipline and a priority on structural reforms.

"Contagion risks center on Spanish, Italian and French banks exposed to Turkish foreign currency debt, as well as Argentina and South Africa", warned analysts at ANZ.

"If you have dollars, euros or gold under your pillow, go to banks to exchange them for the Turkish lira. This is a domestic and national struggle".

President Tayyip Erdogan denied on Saturday that Turkey is in a currency crisis, dismissing a plunge in the lira as "fluctuations" unrelated to the country's economic fundamentals.

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