Recep Tayyip Erdogan tells Turkey to 'trust in God' as lira falls

Galtero Lara
Agosto 10, 2018

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.

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

At 8.47 a.m. Eastern time - 3:47 Turkey - Trump had turned to Twitter to announce that he would be doubling steel and aluminum sanctions on Turkey.

Shares in France's BNP Paribas, Italy's UniCredit and Spain's BBVA fell by around 3 per cent after the Financial Times reported that the European Central Bank is concerned about their exposure to Turkey in light of the lira's dramatic fall.

"Aluminum will now be 20 percent and Steel 50 percent".

President Recep Tayyip Erdoğan, having secured sweeping new powers after elections this summer, tried to restore confidence in the currency on Friday by telling Turks to use "gold under the pillow" to buy the lira.

Waves from the crisis spread overseas, with investors selling off shares in European banks with large exposure to the Turkish economy. Erdogan has promised a new economic model driven by Albayrak, who is also his son-in-law.

His characteristic defiance in the face of the crisis has further unnerved investors.

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"Aside from the impact on a few small neighbouring countries, most notably Bulgaria, the direct risk of contagion from Turkey's crisis to other emerging markets is fairly low", said William Jackson, chief emerging markets economist at Capital Economics. In his speech in the northeastern city of Bayburt, Erdogan added that he would decisively defend the country against economic attacks.

Erdogan appeared to blame foreigners for trying to hurt Turkey, "This will be my people's response against those waging an economic war against us", he said.

Investors hoping Erdogan's comments would give some indication that the government was prepared to support the lira were disappointed with the currency crashing further in value.

"The dollar can not block our path". As the lira falls in value, the debt becomes harder to pay.

He said: "If they have their dollar, we have the people, we have Allah". "The US should not forget that it could lose a strong and honest partner like Turkey if it does not change its attitude", he was quoted as saying by Hurriyet daily. The concern is that Turkish borrowers could default on loans from European and perhaps other foreign banks, which would damage those banks' health.

The reaction from global currency markets to the rift between two North Atlantic Treaty Organisation allies caused the euro to slump to a 13-month low and pushed the dollar to a one-year high. NO BREAKTHROUGH While Turkey and the United States disagree over a host of issues, the most pressing disagreement has been over Brunson and the detention of other USA citizens in Turkey. The plunge in the value of the currency coupled with an inflation rate of almost 16% could cause a lot of damage to Turkey's economy.

High level meetings in Washington between US and Turkish officials over a detained American pastor ended this week without an apparent resolution. While there was no statement from the Turkish side, US State Department spokesperson Heather Nauert said wide-ranging conversations had been held.

"However, I say it once again from here". Erdogan has been putting pressure on the central bank to not raise interest rates in order to keep fueling economic growth.

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