Erdogan Tells Turks to Buy Crumbling Lira as Trump Turns the Screws

Frederick Owens
August 13, 2018

'I have just authorized a doubling of Tariffs on Steel and Aluminum with respect to Turkey as their currency, the Turkish Lira, slides rapidly downward against our very strong Dollar!' Trump said in an early morning post on Twitter.

Turkish President Tayyip Erdogan on Saturday said it was wrong of the United States to try to bring Turkey into line with threats, a day after President Donald Trump doubled tariffs on Turkish metal imports as the row between the two North Atlantic Treaty Organisation allies deepened.

Turkey's Foreign Ministry responded, saying "President Trump's decision on imposing additional tariffs targeting our country's steel and aluminum exports, in complete disregard of World Trade Organization rules, can not be associated with seriousness expected from a state".

In a New York Times article on Saturday, Mr Erdogan warned that Turkey would be forced to seek new friends.

Earlier on Friday the lira plunged as much as 14 percent on as worries about Erdogan's influence over monetary policy and worsening USA relations snowballed into a market panic that also hit shares of European banks. Turkey answered the March tariff announcement by placing its own tariffs on $267 million of USA goods.

On Friday, before Trump's tweet, Erdogan had tried to stem the sell-off by appealing to Turkish citizens to exchange any dollars, euros or gold for lira to help the currency.

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.

The lira hit a record low of 6.24 per dollar on Friday, before recovering to 5.92 - still down a whopping 7 per cent on the day.

A financial shockwave ripped through Turkey on Friday when its currency nosedived over concerns about the country's economic policies and a deepening row with the US.

Turkey is at loggerheads with the U.S. in one of the worst spats in years over the almost two-year detention of American pastor Andrew Brunson and a host of other issues.

Trump's "jubilation in inflicting economic hardship on its North Atlantic Treaty Organisation ally Turkey is shameful", Zarif wrote on Twitter.

Erdogan called on Turks to not be concerned about exchange rate movements, mockingly declaring "the dollar, the mollar will not cut our path".

More news: United States tariffs hike adds to Turkey's economic problems

Turkish Presidential Spokesman Ibrahim Kalin earlier wrote in the Daily Sabah newspaper that the USA runs the risk of losing Turkey as its ally.

Russian Federation would consider it an economic war if the United States imposed a ban on banks or a particular currency, Prime Minister Dmitry Medvedev said on Friday, the TASS state news agency said. If there is anyone who has dollars or gold under their pillows, they should go exchange it for liras at our banks.

According to figures from the Turkish Government, for the period of 2002 to October 2017, Turkish direct investments in the United States reached $3.7 billion while US investments in Turkey amounted to $11.1 billion, second only to the Netherlands' 21.6 billion.

Jay Sekulow, an attorney for Trump who is also representing Brunson's family, told talk-show host and political commentator Sean Hannity's radio program on Friday: "We're close to getting a resolution in that case".

Belpointe Chief Strategist David Nelson on the potential global market impact from Turkey's financial crisis and the future of Tesla.

"It is hard to imagine how the United States and Turkey fix their relationship, which was already faltering, after this episode", Mr Cook told The National.

"This is a national, domestic battle".

Waves from the crisis spread overseas, with investors selling off shares in European banks with large exposure to the Turkish economy. His comments on interest rates - and his recent appointment of his son-in-law as finance minister - have heightened perceptions that the central bank is not independent.

In an opinion piece in the New York Times, he warned the USA that Ankara had other alternatives as allies.

"The basic reason the exchange rate has gone off the rails is that confidence in the management of the economy has disappeared both domestically and overseas", said Seyfettin Gursel, a prominent economist and a professor at Turkey's Bahcesehir University.

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. But since adopting increased powers, Erdogan appears to have greater control over the bank as well.

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