Turkish lira slumps to new record low as Donald Trump doubles tariffs

After inconclusive talks this week on solving the spat, Mr Trump took advantage of Turkey’s turmoil to turn the screws on the country.

The United States had warned it was reviewing Turkey’s duty-free access to its markets, after Ankara imposed retaliatory tariffs on USA goods in response to American tariffs on steel and aluminium. At one point during the day, it had fallen more than 20 percent.

This is double the level the president imposed on a range of countries earlier this year, including European Union member states.

On Friday, the Turkish currency plunged to another record low amid concerns over Erdogan’s unorthodox economic policies and a diplomatic row with the United States that has led to sanctions. Turkey’s energy minister announced on August 8 that Turkey will keep buying liquid natural gas from Iran in violation of US sanctions.

The currency’s drop – 41 per cent so far this year – is a gauge of fear over a country coming to terms with years of high debt, worldwide concern over President Recep Tayyip Erdogan’s push to amass power, and a souring in relations with allies like the U.S.

‘If they have their dollar, we have the people, we have Allah, ‘ he said. Over the last year the Lira has lost 33% of its value and its cost of servicing its debt has risen to the highest level in 9 years.

As he spoke, the lira fell further – adding to worries about the country’s financial stability.

This week, the Turkish lira has fallen 23% against the dollar, losing almost a quarter of its value.

Turkish President Recep Tayyip Erdoğan struck a defiant note in a series of Twitter messages shortly before Trump’s announcement.

Relations between Washington and Turkish President Recep Tayyip Erdogan also have worsened because of the detention of three locally employed United States consular workers, trade matters and differences over Syria. “Look at what we were 16 years ago and look at us now”.

And it remains unclear if the bank would be willing to sharply lift rates, with analysts saying the nominally independent institution is under the influence of Erdogan, who wants low rates to keep growth humming.

Erdogan has blamed outside forces for trying to bring down Turkey’s economy. “Hopefully we will overcome this disaster and we will also successfully overcome this economic war”, Erdogan said.

Last week, Erdogan called on Turks to convert their foreign currency and gold into Turkish lira to help the currency. “You will not make money at the expense of Turkish people”.

Ankara and Washington have been at odds over the detention of the American evangelical pastor Andrew Brunson on terrorism charges, a matter that Trump has discussed directly with Turkish President Recep Tayyip Erdogan over the phone, The New York Times reported.

It is possible that Trump cited the lira’s decline as a mere pretense for pressuring Turkey to release the American pastor. In the latter’s case, investors fear that Europe’s banks could sustain large losses if Turkey is forced to default on its debts. Brunson is on trial and faces up to 35 years in prison if he is found guilty.

The lira’s decline caps a week of political news that’s unnerved investors, as the U.S. ramped up sanctions on Turkey and Russian Federation and as the United Kingdom fretted over a so-called no-deal Brexit. The Treasury Department announced fresh sanctions on two Turkish government officials in response to Turkey’s refusal to let Brunson go. “Don’t heed them”, Erdogan said Thursday. He added that the country will continue to enjoy good economic relations with several major nations.

The Associated Press contributed to this article. Mario Ritter was the editor.