Trump puts pressure on Turkey by doubling down on tariffs

Trump puts pressure on Turkey by doubling down on tariffs

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 Turkish lira has always been falling on worries about Erdogan's influence over monetary policy and worsening relations with the United States.

The lira dropped by over 11 percent in value in one day on Friday morning to almost six lira per dollar.

Turkey's currency has nosedived amid concerns about the country's economic policies and its dispute with the US. U.S. stocks were also rattled.

The lira's value fell about 13 percent against the dollar on Friday.

The final gut punch to the lira came after Erdogan's speech, when Trump tweeted that he had "just authorized a doubling of tariffs on steel and aluminum with respect to Turkey".

Trump wrote on Twitter.

A "gigantic rate hike" of at least 500 basis points to calm markets and a clear commitment from the Central Bank of Turkey to support the currency could help halt the decline, Hordijk said, adding, "Another bandage to stop the lira from bleeding to death would be capital controls, but Erdogan opposes these measures".

"Do not worry!" He said Turkey was not afraid of "threats" and added Turkey had "alternatives" for economic cooperation in many places "from Iran, to Russian Federation, to China and some European countries". Financial upheaval there risks further destabilising an already volatile region.

"As he stated, the president has authorized the preparation of documents to raise tariffs on imports of steel and aluminum from Turkey", White House Deputy Press Secretary Lindsay Walters said. The White House said he had authorized them under Section 232 of USA trade law, which allows for tariffs on national security grounds.

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Turkey's trade ministry said the USA tariff moves were against World Trade Organization rules.

President Trump called Brunson an "innocent man of faith" who should be released immediately. The president, who says a shadowy "interest rate lobby" and Western credit ratings agencies are attempting to bring down Turkey's economy, appealed to his countrymen's patriotism.

Last week, the United States imposed sanctions on Turkey's justice minister and interior minister for not releasing pastor Andrew Brunson.

What's happening to Turkey's currency right now?

Brunson, an evangelical Presbyterian from North Carolina, was jailed for allegedly supporting a group that Turkey blames for the failed coup. He added that the country will continue to enjoy good economic relations with several major nations.

More evidence of how nervous investors are about Turkey's economy could be seen in the iShares MSCI Turkey exchange-traded fund, which plunged 18% and saw the most premarket trades ever, according to Bloomberg. Gulen denies the allegation. That makes a loan in dollars that much more expensive to repay.

Treasury and Finance Minister Berat Albayrak - who is Erdogan's son-in-law - was scheduled later on Friday to outline a 'new economic model'.

The lira's plummeting value, the potential for debt defaults, the possibility of a balance-of-payments crisis and rising inflation all represent clouds gathering ahead of an economic storm that could batter the country.

The drop in the lira has put increasing pressure on Turkish banks, given many companies have borrowed heavily in foreign currency.

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