Turkish Currency Collapses After Trump Doubles Metals Tariffs

Galtero Lara
Agosto 11, 2018

Turkish President Tayyip Erdogan told Turks to sell their gold and dollars to support the crumbling lira.

Turkey says doubled tariffs on Turkish steel and aluminium announced by US President Donald Trump are against the rules of the World Trade Organisation (WTO).

The Turkish lira fell at least 13 percent Friday, as President Erdogan called for people to exchange their other forms of money to the lira.

Economist Chad Bown, who specializes in trade issues, said Turkey accounted for just over four percent of U.S. steel imports in 2017, but a very small fraction of the aluminum brought into the country.

The lira has been under sustained pressure on foreign exchanges, dropping by nearly 50% against the dollar in the past 12 months. US stocks were also rattled, with banks again in focus. As the lira falls in value, the debt becomes harder to pay.

It had been billed as a state visit that would patch up frayed ties between two North Atlantic Treaty Organisation allies and potentially serve as a platform for Turkey to make overtures toward Europe after months of strained relations.

"Turkey expects other member countries to abide by worldwide rules", the country's trade ministry said in a statement.

Diplomatic relations between the United States and Turkey have declined since the failed 2016 Turkish coup.

That had already added $40 million to the cost of a Plains All American crude oil pipeline that will use steel supplied by a Greek company, Plains executives said.

The euro's fall comes as investors try to come to grips with how big a threat the troubles in Turkey might pose for the currency union.

More news: District Attorney reviewing sexual assault case against Anthony Anderson

"We think that Turkey has a toxic combination of a weak external position (current account deficit), excessive private sector debt and a high level of foreign funding in the banking system".

Turkey's currency, the lira, has hit record lows, creating a headache for the country's president and pushing up prices on everyday items.

The prospect of a deal for Brunson's release appeared high as Turkish officials traveled to Washington this week, but the deal apparently fell apart over last-minute Turkish demands.

"Don't forget, if they have their dollars, we have our people, our God", he said.

The Turkish currency has plunged to an all-time low amid concerns over the president's economies policies persisted and as a dispute with the United States showed no sign of subsiding.

Aksoy said sanctions would only damage the relationship which has withstood the trials of time.

The new set of economic steps are aimed at securing an economic growth of 3-4 percent in 2019, and decreasing the inflation rate to single digits, the ministry said in a press release on August 9. On Thursday Ergodan said Turkey will withstand the economic pressure.

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

Coupled with an inflation rate of almost 16 per cent, that could cause severe damage to the local economy.

"The price of the food that I buy increases day by day, the fuel that I put in my auto to distribute lunches is more expensive, but I can not raise my prices from one day to the next, " she said. The tech-heavy Nasdaq composite was down 83 points, or 1.1%, poised to end an eight-day winning streak.

Otros informes por

Discuta este artículo

SIGUE NUESTRO PERIÓDICO