Turkey targets iPhone after Trump doubles tariffs

Gladys Abbott
August 14, 2018

The lira has lost about a fifth of its value against the greenback since Friday.

A Turkish business now effectively owes twice as much as it did at the beginning of the year.

The United States has imposed sanctions on two Turkish ministers over the trial on terrorism charges of a US evangelical pastor in Turkey, and last week Washington raised tariffs on Turkish metal exports.

Turkey's market carnage rippled across emerging markets, sending both stocks and currencies toward their lowest levels in a year.

Chancellor Angela Merkel says that Germany wants to see Turkey prosper economically and is stressing the importance of its central bank's independence.

Turkey's weakened currency, the lira, plunged by a full 20% in response.

"What is the reason for all this storm in a tea cup?" There is no economic reason. "This is called carrying out an operation against Turkey", he told reporters on Sunday, Aug. 12.

"I am specifically addressing our manufacturers: Do not rush to the banks to buy dollars". "You should know that to keep this nation standing is. also the manufacturers" duty".

According to experts, the dip in the rupee happened primarily due to the Turkish lira falling almost 8% in one day.

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Separately, the Istanbul and Ankara prosecutor's offices launched investigations into individuals suspected of being involved in actions that threaten Turkey's economic security, broadcaster CNN Turk and state news agency Anadolu reported.

India's government urged people not to panic on Tuesday after the rupee slid to an all-time low against the dollar. Meanwhile, inflation has hit 15 percent.

Investors are anxious that Turkish companies that borrowed heavily to profit from a construction boom may struggle to repay loans in dollars and euros, as the weakened lira means there is now more to pay back.

Trump has been criticising the company since June, when it said it would move more manufacturing out of the U.S. to avoid European tariffs. Following the meeting, Bolton gave no indication that the standoff between Turkey and the United States will terminate unless the detained American pastor, Andrew Brunson, is freed.

The U.S. government believes that Brunson - a Turkish-American NASA scientist accused of links to U.S-based Muslim cleric whom Turkey blames for a failed coup in 2016 - and three Turkish employees of U.S. diplomatic missions accused of terror-related charges are being held unjustly.

Early on Friday, Trump announced he would double steel and aluminum tariffs against Turkey, causing the lira to lose up to 18 percent, and investors to lose what remaining confidence they had.

What are Turkish officials doing about the lira?

"All our action plan and measures are ready", he said, but did not provide details on what those steps would be. Erdogan's remarks also knocked back investors' expectations of a rate hike from the central bank. This includes an emergency interest rate hike by the central bank, imposing capital controls, fiscal reforms, securing a rescue package by the International Monetary Fund or other lenders and ending the current diplomatic fight with Donald Trump. Credit-fueled growth helped the Turkish economy grow and boosted the government's popularity through increased consumption and major construction projects.

Worry about the currency crash has sparked fears over the risk of economic "contagion" in Europe.

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