Turkish lira rebounds after Qatar pledges $15 billion

Galtero Lara
Agosto 16, 2018

Tariffs on American cars were doubled to 120 percent while tariff on alcoholic drinks to 140 percent.

Trump's doubling of tariffs on Turkish metals last week prompted Ankara, which says it will not bow to threats, to raise tariffs on US cars, alcohol and tobacco by the same amount on Wednesday.

Turkey should commit to sound economic policies to promote stability and reduce imbalances at a time of market volatility, an International Monetary Fund (IMF) spokesperson said on Wednesday as a row between Washington and Ankara over the jailing of an American pastor dragged on.

The White House called the Turkish response a step in the wrong direction and signaled a hard line on Brunson's release.

Washington's move came during an ongoing dispute over Turkey's holding of an American pastor for two years. The lira lost almost 40 percent against the dollar this year and suffered a staggering collapse on the heels of Trump's announcement of increased tariffs on metals.

Meanwhile, Qatar said it would make a $15 billion investment in Turkey to help the country's ailing economy.

Despite the political tensions, the lira rebounded 6 percent on Wednesday, strengthening to about 6.0 to the dollar.

Turkey's Vice President Fuat Oktay said on Twitter that the tariffs on certain products were increased "within the framework of the principle of reciprocity in retaliation for the conscious economic attacks by the United States". Turkey's exports to the United States previous year amounted to $8.7 billion, making it Turkey's fifth-largest export market.

"The president has a great deal of frustration (about) the pastor not being released", White House press secretary Sarah Sanders said Tuesday.

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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. Brunson's lawyer told CBS News that a higher court was still considering the appeal and could overrule that decision.

She added that even if pastor Andrew Brunson was released, tariffs would remain in place on steel.

White House spokesperson Sarah Sanders (Rear) attends a press briefing at the White House in Washington D.C., the United States, on August 15, 2018.

President Trump demanded Turkey free Brunson and then followed through with his threat to hit Ankara with sanctions and tariffs when he wasn't released.

It added that Turkey's current economic situation could be managed with decisive and well-calibrated policies, such as "appropriate fiscal consolidation measures" and "working to defuse tensions with the USA".

Qatar poured funds into the country the same day Turkey doubled tariffs on some US imports, such as cars, alcohol and tobacco, one day after President Recep Tayyip Erdogan called for a boycott of iPhones.

In total, companies in Turkey have $217 billion in net foreign-exchange debt, equal to about a quarter of gross domestic product, according to central bank data.

He also said the government expected a more modest growth from the Turkish economy, which expanded 7.4 percent in 2017.

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