Published: Sun, August 12, 2018
Worldwide | By Jermaine Blake

Erdogan vows to defy United States 'threats' after currency crash

Erdogan vows to defy United States 'threats' after currency crash

On Friday, the euro sagged to a 13-month low against the dollar, down 0.7 per cent to $1.1450, after the Financial Times reported that the European Central Bank was anxious about possible losses at eurozone banks operating in Turkey.

Iran has also suffered from a major tumbling of its currency this year partly over reimposition of United States sanctions after Trump abandoned a 2015 nuclear deal.

Indeed, through Thursday, the Turkish lira had lost 32 percent of its value against the dollar just since the beginning of the year.

"Aluminium will now be 20 percent and Steel 50 percent".

On the morning of August 10, U.S. President Donald Trump intensified these divisions by tweeting that he had authorized a doubling of tariffs on Turkey's steel and aluminum, rising to 20 percent on aluminum and 50 percent on steel.

"In that sense, the Turkey situation can be a contagion not only in Europe but across emerging markets", Anderson said. Financial upheaval there risks further destabilising an already volatile region.

The currency had spent much of 2014 hovering at just over two to the United States dollar but broke through the three mark for the first time after the 2016 failed coup bid and then slid to four earlier this year. "The tweet is mightier than the Turkish sword", Cristian Maggio, head of emerging markets strategy at TD Securities, said in a note to clients.

White House spokeswoman Lindsay Walters later clarified, "As he stated, the president has authorized the preparation of documents to raise tariffs on imports of steel and aluminum from Turkey".

Turkey's trade ministry said the tariffs were against World Trade Organization rules.

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Japan has repeatedly said it prefers multilateral trade negotiations, which puts it at loggerheads with the United States. We are quite certain there will be some sort of tariffs on Japanese cars.

Washington and Ankara have been at odds over a wide range of topics - from diverging interests in Syria to Turkey's ambition to buy Russian defence systems, and the case of evangelical USA pastor Andrew Brunson. A delegation of Turkish officials held talks with their counterparts in Washington this week but there was no sign of a breakthrough. As the lira falls in value, the debt becomes harder to pay.

The president's characteristic defiance in the face of a shaky economy has further unnerved investors.

"These are the bullets, cannonballs and missiles of an economic war waged against our country", he said. He urged Turkish citizens to immediately exchange their gold and dollars for lira. "Don't worry", Erdogan told a crowd in the northeastern city of Bayburt. He added that the country will continue to enjoy good economic relations with several major nations.

Turkey, home to the Incirlik air base that is used by USA forces in the Middle East, has been a North Atlantic Treaty Organisation member since the 1950s.

Turkish Presidential Spokesman Ibrahim Kalin earlier wrote in the Daily Sabah newspaper that the United States runs the risk of losing Turkey as its ally. Erdogan has frequently blamed an "interest rate lobby" and Western credit ratings agencies for trying to bring down Turkey's economy.

Two, President Recep Tayyip Erdogan's slide in authoritarianism appears to be having an impact on the economy in a roundabout way. Gulen denies the allegation. Brunson was moved from prison and placed under house arrest on July 25.

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.

The Treasury Department targeted Turkey's justice and interior ministers with financial sanctions last month after the government refused to allow Brunson to return to the U.S.

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