Erdogan warns of campaign against Turkey as lira plummets

Geneva Stokes
August 13, 2018

US President Donald Trump is doubling tariffs imposed on Turkish steel and aluminum, insisting that the relationship between the two countries is 'not good'.

Erdogan said those who plotted against Turkey in a failed coup attempt in July 2016 were now trying to target the country through its economy, and pledged to fight back.

Mr Trump said tariffs on aluminium imports would be increased to 20% and the tariff on steel imports will be raised to 50% as the Turkish Lira "slides rapidly downward against our very strong Dollar!".

Turkey later said Erdogan had held a phone call with Russian President Vladimir Putin to discuss economic ties.

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. In the past, Trump has threatened to impose trade barriers on countries that deliberately push down the value of their currencies, so as to make their goods cheaper for American consumers (and thus, more competitive than the wares of USA manufacturers).

A plunge in the Turkish lira rocked global equities and emerging markets yesterday and fear of further fallout sent investors scurrying for safety in assets like the yen and United States government bonds.

Turkey's president on Saturday blamed the country's economic downturn on the United States and other nations that he claims are waging "war" against his country.

"Our relations with Turkey are not good at this time!", the President tweeted.

Relations between the two North Atlantic Treaty Organisation allies have sunk to their lowest point in decades over a string of issues including the detention of U.S. pastor Andrew Brunson on terror-related charges, prompting the lira to hit record lows against the dollar.

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Criticizing the state of the US relationship with Ankara, Trump announced on Twitter that he had authorized a doubling of duties on aluminum and steel imported from Turkey, making them 20 percent and 50 percent respectively.

Meanwhile, markets are deeply concerned over the direction of economic policy under Erdogan, with inflation at almost 16 percent but the central bank reluctant to raise rates in response.

Washington is in a standoff with Ankara over the imprisonment and house arrest of American pastor Andrew Brunson.

"If they have their dollars, we have our people, our God".

Turkey has also been hit by U.S. sanctions on Iran, given that half of Turkey's oil imports come from Iran.

Nationalist Movement Party (MHP) leader Devlet Bahçeli said: "Economic terror is being created on the pretext of a pastor".

Erdogan said high foreign exchange rates were the means used in plots against Turkey.

Ankara had already taken measures to respond and would continue doing so, he added.

After his 24 June election victory, Erdogan put his son-in-law Berat Albayrak in charge of a newly expanded finance ministry while a new presidential system did away with the office of prime minister, whose last incumbent Binali Yildirim had on occasion urged caution in economic policy.

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