There was a clear, sharp drop in the lira’s value on Friday after Trump tweeted he was doubling tariffs on Turkish steel and aluminum, citing a national security threat, and a smaller decline when the USA sanctioned Turkey’s Interior and Justice Ministers on August 1. “We will protect our economic independence by being tight-knit together”.
Andrew Brunson has been at the heart of the ongoing fight after the USA sanctioned two top Turkish officials for his continued detention, and Turkey’s vow to retaliate, even as its currency plummets.
As Turkey’s currency started dropping, President Donald Trump announced that the US would be doubling its tariffs on imports of Turkish steel and aluminum.
Turkey is in the throes of a full-blown currency crisis, with the Turkish lira losing almost 45 percent of its value since the start of the year.
The Turkish lira has lost more than 40 percent of its value.
The lira was around 6.55 to the dollar on Tuesday, up 6% on the previous day after the central bank freed up cash for banks, and a slight recovery from a record low of 7.23 on Sunday. Turkey has suffered from fiscal imbalances for years as it relied on foreign capital to fund much of its growth.
The euro was also affected by the lira’s drop, following a Financial Times report suggesting the European Central Bank has concerns about euro zone banks with exposure to Turkey.
President Erdogan said Turkey was taking measures to stabilise the economy, and should not “give in to the enemy” by investing in foreign currencies.
“Even basic things like butter and vegetables have increased a lot over the last few months”.
Back in July, Turkish president Recep Tayyip Erdogan told reporters: “We have made a $900 million payment so far [for the sale of the F-35 jets]”.
He has portrayed its depreciation as an “attack on our country” and on Tuesday announced a boycott of U.S. electronic goods. The country is, as ever, awkwardly positioned between two ostensibly friendly but imperious powers: the U.S. and Russian Federation. “Even if all these claims were to be written off-they won’t be-the impact on the USA banking system would be minimal”.
Turkey’s strained relationship with the United States has reached a low point with the Brunson affair.
U.S. Charge d’Affaires Jeffrey Hovenier talks to members of the media after visiting United States pastor Andrew Brunson, who is being held under house arrest in Izmir, Turkey, Aug. 14, 2018.
It’s not clear from the speech quite what this boycott could entail – whether it’s Erdogan encouraging people to buy non-American devices or whether this will be a full-on ban on imports. He renewed a call on Turkish citizens to convert their dollars into the local currency. “I don’t see how a boycott will help our economy”.
Treasury and Finance Minister Berat Albayrak, Erdogan’s son-in-law, will speak with about 1,000 foreign investors on Thursday via a teleconference, the private NTV broadcaster said.
Making matters worse, President Erdoğan continues to say that the lira’s crash has no economic basis and has ruled out the possibility of higher interest rates, which is exactly what economists say is needed. Speculation is also growing that Turkish policy makers will heed calls from corporate and banking executives to raise interest rates to stem the rout.
He also emphasized that there was a plan in place for small to medium businesses, which he called the “real” economy.
Turkey’s weakened currency, the lira, plunged by a full 20 percent in response.
A similar plea came from the nation’s banks, including the second-largest by assets, Turkiye Garanti Bankasi AS. “That doesn’t mean you like it or want it”. “The tension with the USA needs to end”.