Turkish lira under fair value: Global association

Cornelia Mascio
Agosto 16, 2018

Erdogan's boycott is reminiscent of the decision by President Vladimir Putin to ban food imports from countries that slapped sanctions on Russian Federation in 2014 over its annexation of Crimea.

The president's comments came after diplomats from both sides met Monday to calm tensions.

President Donald Trump had previously announced that the USA was doubling steel and aluminium tariffs on Turkey, as the two North Atlantic Treaty Organisation allies row over the detention by Turkish authorities of American pastor Andrew Brunson. The United States has imposed sanctions on two Turkish ministers over the trial on terrorism charges of a USA evangelical pastor in Turkey.

Erdogan said the nation of 80 million people would stop buying American electronics, condemning the "explicit economic attack" against his country.

During an impassioned speech yesterday in Ankara, Turkey's capitol, Erdogan accused the United States of being "economic hitmen" who use the economy "as a weapon".

Turkey is hiking tariffs on imports of certain U.S. products in response to American sanctions on Ankara that caused the value of the lira to plunge, a decree published Wednesday said.

The lira TRYTOM=D3 - which plummeted to a record low of 7.24 to the dollar at the week's start, rattling global markets - was about 2 percent weaker at 6.47 after rebounding more than 8 percent overnight. Turkey has an estimated 47 million smartphone users, though iOS penetration in the country is estimated to hover around just 16 per cent.

USA national security adviser John Bolton on Monday met Turkey's ambassador to the United States to discuss Brunson's detention.

Worldwide investors are anxious about Turkey's high amount of debt held in foreign currencies, especially the dollar. Investors are also anxious about the effects of the dispute between two North Atlantic Treaty Organisation allies.

Turkey's Interior Ministry says it will take legal action against hundreds of social media accounts that it says are provoking a drop in the country's currency, the lira. He speaks of "economic war" and a "campaign" waged by external powers created to weaken Turkey.

Armed with additional clout in the latest election, he recently put in 40-year-old son-in-law, Berat Albayrak, in charge of the Ministry of Finance and Treasury, a move that gutted confidence in the independence of the Turkish Central Bank and its ability to resolve such crises. While Turkey's central bank has raised lending rates by 500 basis points this year to 17.75 per cent, it hasn't acted since the latest turmoil began with US sanctions on the interior and justice ministers on August 1. Central banks try to ignore politics when making economic decisions.

The White House said on Tuesday President Donald Trump was frustrated that Turkey had not released Brunson. The 50-year-old pastor is charged with terrorism links and spying.

United States embassy charge d'affaires Jeffrey Hovenier on Tuesday visited Brunson in the western city of Izmir. Although he was released to home detention, he faces a prison sentence of up to 35 years if he is convicted at the end of his ongoing trial. Susan Shand adapted it for Learning English.

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