Relations with Turkey are not good!

Galtero Lara
Agosto 11, 2018

On Friday, Trump announced that the USA will impose a 20 percent duty on aluminum and 50 percent one on steels as tensions mount between the two North Atlantic Treaty Organisation allies over Ankara's imprisonment of United States pastor Andrew Brunson.

U.S. President Donald Trump said on Friday he had authorised higher tariffs on imports from Turkey, imposing a 20 percent duty on aluminium and 50 percent one on steel, as tensions rose between the two North Atlantic Treaty Organisation allies over Ankara's detention of an evangelical pastor and other diplomatic issues.

He added, America's current relationship with Turkey is on a downward spiral.

With US sanctions and tariffs hitting Turkey this month for its refusal to release an American pastor, the relationship between the two North Atlantic Treaty Organisation allies is crumbling amid fears on the regional impact.

Then, on Friday, just as the Turkish lira was in a state of free fall, U.S. President Donald Trump helped exacerbate Turkey's problems by announcing dramatically increased tariffs on metal imports from Turkey.

The lira slid to a fresh record low against the USA dollar.

"If you have dollars, euros or gold under your pillow, go to banks to exchange them for Turkish lira. This is a national, domestic battle", he said. On Friday, he said the country had to take steps in answer "to those who have waged an economic war against us".

The lira fell as much as 18 per cent against the US dollar in its worst day since Turkey's financial crisis of 2001.

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Turkey's ever combative President Recep Tayyip Erdogan vowed to not bow to economic pressure.

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

Wall Street couldn't avoid the bloodbath on Friday triggered by a collapse of the Turkish lira amid escalating diplomatic tensions between the U.S. and Turkey.

Erdogan also Friday held telephone talks with Russian President Vladimir Putin, discussing economic and trade issues as well as the Syria crisis, the Turkish presidency said.

The recent sell-off in the lira has been fuelled by investor concerns over Erdogan's grip on monetary policy under a new powerful executive presidency and the ongoing row with the United States.

He also said increasing production, exports and employment was the best response to the country's challenges. "The tweet is mightier than the Turkish sword", Cristian Maggio, head of emerging markets strategy at TD Securities, said in a note to clients, with reference to Trump's comments. But since adopting increased powers, Mr Erdogan appears to have greater control over the bank as well. "While they have dollars, we have our people, law and Allah", the Turkish leader said addressing citizens in the Black Sea city of Rize.

New Finance Minister Berat Albayrak - Erdogan's son-in-law - acknowledged that the central bank's independence was critical for the economy, promising stronger budget discipline and a priority on structural reforms. President Erdogan has pressured the central bank to maintain low interest rates by refraining from implementing much-needed hikes.

Emerging market currencies are ending the week with a brutal sea of red across the board, with consistent losses throughout Asia, while the South African rand and Turkish lira are leading the way with losses within the EMEA.

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