Turkish Currency Collapses After Trump Doubles Metals Tariffs

Marcus Newton
August 11, 2018

On Friday, President Trump announced that he will double America's metal tariffs on Turkey - despite the fact that he has no good reason for doing so.

President Trump said Friday the USA will double tariffs on steel and aluminum for Turkey, noting the relationship between the two states "are not good at this time!".

Bank shares across Europe fell and the euro slipped to its lowest since July 2017 as the Financial Times quoted sources as saying the European Central Bank was concerned about European lenders' exposure to Turkey.

The United States imposed sanctions on two Turkish officials earlier this month over a detained American pastor who is being tried on espionage and terror-related charges.

Officials from Mr Erdogan's office said the two men "expressed pleasure" that relations between Turkey and Russian Federation were progressing "positively" amid joint defence and energy projects.

Turkish President Recep Tayyip Erdogan has lashed out against a shadowy global "interest rate lobby" which he suggested was "campaigning" to harm Turkey's economy, after the lira fell more than 14 percent overnight.

But Turkey is not manipulating its currency; the lira is falling because the country is suffering from an economic crisis.

Turkish President Recep Tayyip Erdogan appealed for calm as the country's currency plunged, he urged people to change foreign money into local lira. "This is a national, domestic battle", he told a crowd in the northeastern city of Bayburt.

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

Trump's announcement came as Turkey's embattled lira hit new record lows against the U.S. dollar and euro, losing almost nine percent in value as strains with the United States showed no sign of abating and fears grew over the exposure of European banks.

The lira stood 5.75 against the dollar on Friday morning.

Turkish President Recep Tayyip Erdogan speaks at a pro-Palestinian rally in Istanbul on May 18, 2018. The lack of central-bank action to support the currency is also spooking investors and Erdogan's previous comment that interest rates are the "mother and father of all evil" hasn't helped.

The new set of economic steps are aimed at securing an economic growth of 3-4 percent in 2019, and decreasing the inflation rate to single digits, the ministry said in a press release on August 9.

On Thursday, Erdogan said "If they have their dollar, we have the people, we have Allah". But since adopting increased powers, Erdogan appears to have greater control over the bank as well.

New Finance Minister Berat Albayrak - Erdogan's son-in-law - rolled out the government's new economic plan on Friday, promising central bank independence and tighter budget discipline, but giving few details to reassure investors.

"The price of the food that I buy increases day by day, the fuel that I put in my auto to distribute lunches is more expensive, but I can not raise my prices from one day to the next, " she said. The tech-heavy Nasdaq composite was down 83 points, or 1.1%, poised to end an eight-day winning streak.

Other reports by MaliBehiribAe

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