Trump imposes higher tariffs on Turkey, sending lira crashing

Trump imposes higher tariffs on Turkey, sending lira crashing

I hope we can soon get Pastor Brunson and other Americans released in a win-win fashion for both the USA and Turkey."Trump's move to double tariffs on Turkey was even praised by one of the president's most frequent Democratic critics".

I have just authorised a doubling of tariffs on steel and aluminium with respect to Turkey as their currency, the Turkish lira, slides rapidly downward against our very strong dollar!

Adding to Turkey's fiscal woes, new pension and spending increases announced by president Erdogan in the lead-up to his recent election win have further weakened the outlook for Turkey's public finances.

The meetings came as Turkey seeks to stanch an economic meltdown amid fallout from US sanctions imposed last week over the continued detention of the pastor, Andrew Brunson, who was jailed on espionage and terrorism suspicions more than two years ago and recently released to house arrest.

Turkish President Recep Tayyip Erdogan has said his country will seek "other friends and allies" around the world if the United States continues to take measures against Turkish government officials.

The Turkish lira has always been falling on worries about Erdogan's influence over monetary policy and worsening relations with the United States.

The lira fell as low as 6.75 to the dollar, down a whopping 14 percent on the day and 41 percent since the start of the year as investors worry about the country's economic policies and a dispute with the United States that has led to sanctions and new tariffs. "This is a national, domestic battle", he said.

Earlier on Friday, Mr Erdogan called on Turks to support the struggling the lira by exchanging any foreign money, saying Turkey faced "an economic war".

Q: How is the fall in the lira a problem?

"We think that Turkey has a toxic combination of a weak external position (current account deficit), excessive private sector debt and a high level of foreign funding in the banking system".

Turkish newspaper Hurriyet and other media reports quote Erdogan as making the comment to a group of worshippers following traditional Muslim Friday prayers during a visit to the northern city of Bayburt.

World stock markets fell Friday, particularly in Europe, as investors anxious about the financial stability of Turkey, where the currency has nosedived. The lira has fallen about 40 percent against the dollar this year.

The currency slid almost 8 percent in relation to the dollar to a record low of 6.59 shortly after Trump announced the increase on metals duties on Twitter.

BBVA, which reported a lowly CET 1 ratio of 10.8 percent at the end of the first half, also said a 10 percent slump in the lira would shave 2 basis points off its core capital.

Turkish officials held talks in Washington this week but there was no breakthrough.

He told CNBC: "It has pushed down the lira and the euro as well". He subscribes to the completely backward theory that lower interest rates cause lower inflation, which, now that he's given himself the power to pick the country's top central banker and made his son-in-law the finance minister, is actually being put to the test. Spoiler alert: It is not going well. The president, who says a shadowy "interest rate lobby" and Western credit ratings agencies are attempting to bring down Turkey's economy, appealed to Turks' patriotism.

He also said Turkey had alternatives, "from Iran, to Russian Federation, to China and some European countries".

Independent analysts argue the central bank should instead raise rates to tame inflation and support the currency. "Don't heed them. Don't forget, if they have their dollars, we have our people, our God", Erdogan said.

Q: Why is Turkey's currency so weak? Gultekin hopes that some sort of compromise between Turkey and the USA can be reached, enabling Erdogan to have an "honourable exit" and come up with a substitute for the International Monetary Fund stabilisation programmes of previous crises.

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