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

Eileen GuzmanAug 13, 2018

Speaking to supporters in Trabzon on the Black Sea coast, Erdogan dismissed suggestions that Turkey was in a financial crisis like those seen in Asia two decades ago, dampening expectations of a rate rise to support the currency.

Erdogan said during an address to supporters: "Change the euros, the dollars and the gold that you are keeping beneath your pillows into lira at our banks". This will be my people's response to those who have waged an economic war against us'.

U.S. President Donald Trump said on Friday that he had doubled steel and aluminium tariffs on Turkey, adding to the pressure on the nation's troubled economy amid a diplomatic row with Washington.

That turned into a rout on Friday, with the lira diving more than 18 per cent on the day and more than 40 per cent this year to a new record low after Trump took steps to punish Turkey in a wide-ranging dispute.

Speaking to a crowd in his hometown of Rize on Saturday, Erdogan addressed the recent USA decision to sanction two Turkish officials over the detention of American pastor Andrew Brunson, who has been held in Turkey since 2016 over claims that he was linked to the failed coup attempt in July of that same year.

The new tariff threat targeting Ankara comes as bilateral tensions have risen over the detention and trial in Turkey of US pastor Andrew Brunson, 50.

But Turkey is not manipulating its currency; the lira is falling because the country is suffering from an economic crisis. "Immediately give these to the banks and convert to Turkish lira and by doing this, we fight this war of independence and the future", he said.

U.S. State Department spokesperson Heather Nauert said on Thursday that although the two sides "had wide-ranging meetings at the State Department and with other departments here in Washington", the U.S. side "would define progress as Pastor Brunson being brought home".

And he brushed off the tariffs.

"If we did not release him, they said they would sanction us. Don't give. What we have is enough for us".

Trump announced the punitive doubling of tariffs on Twitter, with the White House saying the sanctions would take effect from August 13.

President Trump's announcement Friday morning that he has authorized the doubling of tariffs on steel and aluminum imports coming from Turkey came in a tweet that noted, "Our relations with Turkey are not good at this time!".

Trump imposed tariffs of 25 percent and 10 percent on imported steel and aluminum respectively earlier this year.

"Failure to reverse this trend of unilateralism and disrespect will require us to start looking for new friends and allies". "We've stood with neighbours before, and will again now", he warned.

"Threats, sanctions and bullying against Turkey will not work".

Ankara wants the United States to extradite Fethullah Gulen, a Pennsylvania-based cleric who Turkish authorities say masterminded the 2016 coup attempt in which 250 people were killed.

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.

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