Turkey currency crashes as Trump doubles metals tariffs

Cornelia Mascio
Agosto 11, 2018

This is just another threat that traders need to factor in, when you consider that the markets are already overwhelmed with prolonged tension around the global trade war narrative, and the unpredictable nature of the Trump Administration that has seen a threat of sanctions on Turkey, new sanctions imposed on Russian Federation and re-imposed sanctions on Iran in just over one week.

The President said he had authorised higher tariffs on imports from Turkey, imposing duties of 20 percent on aluminium and 50 percent on steel. Trump wrote on Twitter.

The United States, the world's biggest steel importer, imposed tariffs of 25 percent on steel and 10 percent on aluminum in March for imports from a variety of countries, in a move that provoked counteraction from trade allies.

Turkey's currency sank to record lows on Friday amid panic about the country's economic health and souring relations with the United States.

Investors have become increasingly concerned with the faltering Turkish economy, its central bank's willingness to respond to the downturn and the impact it could have on global financial markets, according to multiple reports.

In addition to the steep drop in the Turkish Lira, which effectively reduces the impact of the tariffs, the US has so far been unsuccessful in persuading Turkish President Recep Tayyip Erdoğan to release USA pastor Andrew Brunson.

The Turkish president called on Turks to exchange dollars, euros and gold for Turkish lira.

Trump commented on the issue as the Turkish lira has fallen 36 percent in 2018, and the country faces increasing debt without foreign investment.

Ankara and Washington have been at odds over the detention of the American evangelical pastor Andrew Brunson on terrorism charges, a matter that Trump has discussed directly with Turkish President Recep Tayyip Erdogan over the phone, The New York Times reported.

The sanctions on two officials were announced Wednesday.

The two countries are also divided over the detention of three locally employed USA consular staff, Washington's sanctions on Iran, Turkey's plans to buy a Russian missile defense system, and their military interventions in Syria.

As the crisis swelled he told his supporters not to worry. This will be my people's response to those who have waged an economic war against us'.

That turned into a rout on Friday, with the lira diving more than 18 percent on the day and more than 40 percent this year to a new record low after Trump took steps to punish Turkey in a wide-ranging dispute.

"I would say we would define progress as Pastor Brunson being brought home", Nauert said.

In a statement, the White House said the president had authorized the preparation of documents to raise tariffs, citing national security concerns.

"Don't forget, if they have their dollars, we have our people, our God", he said.

Erdogan, a self-described "enemy of interest rates", wants cheap credit from banks to fuel growth, but investors fear the economy is overheating and could be set for a hard landing.

Shares in BBVA were down 5.7 percent late on Friday, UniCredit was off 6.4 percent and BNP dropped 4.4 percent, all exceeding a 4.3 percent drop in the euro zone bank index.

In 2016, when the dollar began to rise, the Grand Bazaar said it had made a decision to accept rent in lira to support the Turkish economy.

Altre relazioniGrafFiotech

Discuti questo articolo

Segui i nostri GIORNALE