Erdogan tells Turks to buy plunging lira as Trump turns the screws

Erdogan tells Turks to buy plunging lira as Trump turns the screws

The Turkish lira plunged 20% Friday after President Trump announced he would be doubling the import tariff on metal produced in that country, sending Turkey's currency to a record low against the United States dollar.

The President said he had authorised higher tariffs on imports from Turkey, imposing duties of 20 percent on aluminium and 50 percent on steel.

On Monday, the Turkish lira suffered its most significant drop in a decade following reports the Trump administration was considering ending Turkey's duty-free access to the USA market.

Trump last month threatened to slap "large sanctions" on Turkey if it did not release American pastor Andrew Brunson, who faces charges of espionage for allegedly supporting a failed coup attempt in 2016.

Trump noted on Twitter that the lira "slides rapidly downward against our very strong Dollar!"

He also urged Trump to recognize the 1915 Turkish slaughter and exile of 1.5 million Armenians as a genocide, which USA presidents have declined to do for decades.

Mr Erdogan held a phone conversation with Russian President Vladimir Putin immediately after the tariffs announcement, and Russian foreign minister Sergey Lavrov is expected in Turkey on Monday.

Concerns were intensified on Friday by a report in the Financial Times that the supervisory wing of the European Central Bank had over the past week begun to look more closely at eurozone lenders' exposure to Turkey.

Erdogan is preaching calm as his country's currency collapses.

"We will not lose the economic war", state-run TRT Haber TV quoted Erdogan as saying, according to Agence France-Presse.

He told supporters to "change the euros, the dollars and the gold that you are keeping beneath your pillows into lira at our banks".

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The dollar rose as exposure to Turkey could impact European banks and spark a domino effect throughout Europe as people begin to pull out of those banks and into the US, said Gregan Anderson, macroeconomic strategist at brokerage Bulltick LLC.

"The dollar can not block our path".

While it was true USA sanctions on a few top Turkish officials over an American pastor being detained had put more pressure on the lira this past week, this was far from the main reason their currency has been falling so fast.

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

Indeed, through Thursday, the Turkish lira had lost 32 percent of its value against the dollar just since the beginning of the year.

"I would say we would define progress as Pastor Brunson being brought home", Nauert said.

"This is a domestic and national struggle".

The lira tumbled about 10 percent on Friday to another record low as investors anxious about Erdogan's unorthodox economic policies and US sanctions.

The NATO allies are at odds over the detention in Turkey of U.S. evangelical pastor Andrew Brunson on terrorism charges. "While they have dollars, we have our people, law and Allah", the Turkish leader said addressing citizens in the Black Sea city of Rize.

New Finance Minister Berat Albayrak - Erdogan's son-in-law - rolled out the government's new economic plan on Friday, promising central bank independence and tighter budget discipline, but giving few details to reassure investors. Hard currency debt issued by Turkish banks suffered similar falls. 'On some days, I end the day with a loss'. He is a self described "enemy of interest rates" and wants banks to lend cheap credit to fuel growth, something experts are anxious could seriously affect the economy.

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