Lira rallies as Erdogan hits back at short-sellers

Lira rallies as Erdogan hits back at short-sellers

The currency has lost almost 40 per cent against the dollar this year, impacted by Mr Erdogan's growing influence on the economy and his repeated calls for lower interest rates despite high inflation.

"Turkey's currency has bounced back from record lows after a lifeline from Qatar".

Washington imposed sanctions on two Turkish ministers two weeks ago over the trial on terrorism charges of United States evangelical pastor Andrew Brunson in Turkey, and last week it raised tariffs on Turkish metal exports.

Kevin Hassett, chairman of the White House Council of Economic Advisers, noted on Monday that those tariffs involve only a "tiny, tiny fraction" of Turkey's gross domestic product. In 2017, the United States exported $9.7 billion dollars in goods to Turkey, according to the U.S. Census Bureau.

Washington's move came during an ongoing dispute over Turkey's holding of an American pastor for two years on charges of military espionage and spying for terror groups.

Last week Trump said he was doubling tariffs on metal imports. "The tariffs are specific to national security", she said.

The top U.S. diplomat in Turkey has called for the cases against an American pastor and others held in Turkey to be resolved "without delay" and in a "fair and transparent manner".

Turkish Foreign Minister Mevlut Cavusoglu struck a somewhat conciliatory note, saying Turkey was ready to discuss its issues with the United States as long as there are no threats. The currency picked up 6 percent and strengthened briefly at just under 6 to the dollar.

Optimism about better relations with the European Union after a Turkish court released two Greek soldiers pending trial and a banking watchdog's step to limit foreign exchange swap transactions have also helped the lira. Then last week, Trump increased them to 50 percent on Turkish steel and 20 percent on Turkish aluminum. The recovery also spilled into the bond market, with yields on 10-year local debt falling 28 basis points to 21.1 percent.

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The lira was trading on Wednesday at 6.0 to the dollar, a gain in value on the day of 5.2 percent.

"There has also been an increase in borrowing of the underlying sovereign bonds, in part the result of hedging CDS (credit default swaps) sold by market makers", IHS Markit analyst Sam Pierson said in a note.

When asked about the impact of the USA spat with Turkey on the country's currency, the spokeswoman said Washington was "monitoring the situation".

Investor attention was focused on a conference call which Finance Minister Berat Albayrak will hold at 1300 GMT to reassure worldwide investors.

"Trade wars help no one, but Turkey will do what is necessary to protect our industries and economy from assault", Pekcan said.

A decree by Erdogan doubled Turkish tariffs on imports of USA passenger cars to 120 percent, alcoholic drinks to 140 percent and leaf tobacco to 60 percent.

With the pledge, Turkey is reaping the rewards of standing by its wealthy Arab ally while Gulf neighbors led by Saudi Arabia cut off diplomatic ties with Qatar past year.

The top USA diplomat in Turkey, Charge d'Affaires Jeffrey Hovenier, visited Brunson and his wife, Norine, Tuesday, calling on Turkey to resolve his case "without delay and in a fair and transparent manner".

Mr Trump has repeatedly asked for Brunson's release.

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