Published: Sat, August 11, 2018
Markets | By Noel Gibbs

Turkish lira crashes as Trump doubles metal tariffs

Turkish lira crashes as Trump doubles metal tariffs

The Turkish lira plunged 20% Friday after President Trump announced he would be doubling the import tariff on metal produced in that country, sending Turkey's currency to a record low against the U.S. dollar.

He declared: "Our relations with Turkey are not good at this time!"

The United States is the world's biggest steel importer.

'Aluminum will now be 20 percent and Steel 50 percent.

Turkish President Recep Tayyip Erdoğan said Friday that his country was the target of a global financial war and urged citizens to exchange their dollars, euros and gold for lira to bolster the economy.

The lira tumbled 13% in one day, to 6.51 per United States dollar, a massive move for a currency that will make the Turkish poorer and further shake global investors' confidence in the country.

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Relations between Washington and Turkish President Recep Tayyip Erdogan also have worsened because of the detention of three locally employed U.S. consular workers, trade matters and differences over Syria.

The Turkish lira fell around 16% against the USA dollar on the day, from $0.18 to $0.15 as of 3pm BST.

"We are entering into a balance-of-payment crisis here", said Cristian Maggio, head of emerging market strategy at TD Securities in London. USA stocks were also rattled, with banks again in focus.

But the shop owners say that change never came and that they still pay their rent in dollars. The predictable result is this has made inflation get out of control - it is up to 15.9 percent when they are supposedly trying to keep it to 5 percent - because the central bank has been so slow to raise rates, and, in fact, refused to do so at its most recent meeting.

He added, America's current relationship with Turkey is on a downward spiral. 'On some days, I end the day with a loss'.

Oil prices rose more than 1 percent as US sanctions against Iran looked set to tighten supply, but futures remained lower for the week as investors anxious that global trade disputes could slow economic growth and hurt demand for energy.

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As President Erdogan continues to exert an iron grip on the government, economy, and people of Turkey, and the specter of a Turkish debt crisis continues to loom, the country's economy and currency are apt to remain under heavy pressure. "Don't heed them", Erdogan said Thursday.

Earlier this week, a Turkish delegation returned from Washington with no movement on the detention of American pastor Andrew Brunson, who is under house arrest in Turkey on terrorism charges.

The lira's plunge is one of the most serious economic crises that Erdogan has faced since coming to power in 2003 in the wake of a financial crisis in 2001 that brought the economy to near meltdown.

Turkey's treasury and finance minister Berat Albayrak - who is Mr Erdogan's son-in-law - tried to ease investor concerns during a conference, saying the government would safeguard the independence of the central bank.

Last week, he called on Turks to convert their foreign currency and gold into Turkish lira to help the currency.

A diplomatic source, however, familiar with talks of Turkish deputy foreign minister Sedat Onal in Washington this week, told The National that exchanging Mr Brunson for Mr Atilla is not on the table from the USA side.

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