Turkey shaken by financial fears, Trump rattles it further

11 August, 2018, 09:24 | Author: Billie Castillo
  • The euro has dropped today after the Turkish lira ad Russian rouble plummeted

Prior to Trump's announcement, the Turkish lira fell to its lowest point ever against the USA dollar on Friday.

The situation was compounded on Friday when US President Donald Trump tweeted that he had authorised a doubling of tariffs on steel and aluminium.

TURKS have been hitting bureau de changes, after being ordered to sell their gold and dollars to support the crumbling Lira.

But while Mr Erdogan - who vowed Turkey would win the "economic war" - favours lowering borrowing costs to fuel credit growth and economic expansion, others would rather see interest rates rise.

Economic experts believe the sharp fall of the lira is mainly because of concerns about the government's economic policies.

Erdogan on Thursday portrayed the currency drop as a "campaign" to harm Turkey and called on the people not to worry.

President Donald Trump announced Friday that he plans to double steel and aluminum tariffs on Turkey - prompting the lira to plunge 20 percent - amid heightened tensions between the two North Atlantic Treaty Organisation allies.

Turkey remains at loggerheads with the United States over the detention for the last two years of American pastor Andrew Brunson and a host of other issues.

"This is a domestic and national struggle".

The Turkish lira fell to record lows as concerns over a widening rift with the United States persisted after a Turkish delegation returned from talks in Washington with no apparent solutions.

The Turkish lira has fallen more than 10% against the dollar after a Turkish delegation in Washington failed to prevent USA sanctions.

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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.

There was no sign on Wednesday that the USA and Turkey were able to make any progress in resolving a diplomatic impasse after a delegation from Ankara met with top State Department officials.

President Trump and Turkish President Recep Tayyip Erdogan appear in the Roosevelt Room of the White House on May 16, 2017.

The recent plunge comes after a Turkish delegation in Washington failed to stop the U.S. from imposing sanctions against two senior ministers. A Russian government statement said the two discussed economic and trade ties, including the success of several joint projects.

Turkish President Recep Tayyip Erdoğan struck a defiant note in a series of Twitter messages shortly before Trump's announcement. "Turkey will fight economic hitmen just as it fought the coup plotters".

But Aykan Erdemir, of the Foundation for Defense of Democracies, said Mr Trump's tariffs announcement comes "at the worst possible time for Mr Erdogan" and fits with United States strategy to increase pressure on Ankara until Mr Brunson is released.

After winning a June election with revamped powers, Erdogan tightened his control over the central bank and appointed his son-in-law Berat Albayrak to head a newly-empowered finance ministry.

Coupled with an inflation rate of almost 16 percent, that could cause a lot of damage to the local economy.

Foreign investors could be spooked and try to pull their money out, reinforcing the currency drop and potentially leading to financial instability.

'The price of the food that I buy increases day by day, the fuel that I put in my vehicle 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.

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