Trump OKs stiffer tariffs on Turkish metals as lira plummets

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A diplomatic tussle between the USA and its North Atlantic Treaty Organisation ally deepened Friday after President Donald Trump said he had authorized the doubling of tariffs on Turkish steel and aluminum.

Turkey's lira plummeted as much as 18 percent on Friday as worries about President Tayyip Erdogan's influence over monetary policy and worsening US relations snowballed into a market panic.

His cause resonates with Trump's Christian conservative supporters, who could be influential as Republicans seek to retain control of Congress in midterm elections in November.

Mr Erdogan appealed for calm and renewed a call on people to change foreign money into local lira.

"There are various campaigns being carried out".

On Friday afternoon Erdogan dug in again, calling for citizens to convert out of dollars and gold and buy the lira to help fight a "national struggle".

Turkey's treasury and finance minister Berat Albayrak - who is Mr Erdogan's son-in-law - tried to ease investor concerns during a conference, saying the government would safeguard the independence of the central bank.

Without naming countries, Erdogan said supporters of a failed military coup two years ago, which Ankara says was organized by a USA -based Muslim cleric, were attacking Turkey in new ways since his re-election two months ago to a new executive presidency. In his speech in the northeastern city of Bayburt, Erdogan added that he would decisively defend the country against economic attacks.

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.

Presenting the government's new economic model, Albayrak said the next steps of rebalancing would entail lowering the current account deficit and improving trust.

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.

Independent analysts argue the central bank should instead raise rates to tame inflation and support the currency.

Where has Erdogan's "economic miracle" gone? .

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.

He continued: "A painful admittance that his powers are outmatched by the forces of markets and that he may have misjudged the economic situation may be a lot to ask of the autocratic leader Erdogan, but the alternative is that the lira will meet the ground at terminal velocity; an impact that will damage the Turkish economy for years to come". That said, the global threat from Turkey's debt problems is relatively small. It has fallen by over 35% this year. "I used to sell 100kg of meat, but eventually I started to sell 10kg in the same period of time", he said.

You can follow the lira price live on Markets Insider. It was eight lira in 2006. It came as a Turkish delegation returned from the United States, reporting no progress on negotiations involving a US pastor imprisoned in Turkey.

On Friday, they also had to also factor in Turkey's economic crisis.

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