Tuesday, 21 August, 2018

Turkey's president: U.S. waging "economic war" against Turkey

An investor looks at an electronic board showing stock information at a brokerage house in Shanghai China. Aly Song Reuters  File An investor looks at an electronic board showing stock information at a brokerage house in Shanghai China. Aly Song Reuters File
Melinda Barton | 12 August, 2018, 18:43

Turkish President Tayyip Erdogan yesterday said it was wrong of the United States to try to bring Turkey into line with threats, a day after US President Donald Trump doubled tariffs on metal imports from Turkey as the row between the two North Atlantic Treaty Organisation allies deepened.

The Lira has now lost 30 per cent against the U.S. dollar, since the start of the year.

On Friday the currency dropped as much as 18 percent at onepoint, the biggest one-day fall since a 2001 financial crisis inTurkey.

Investors have become increasingly concerned with the faltering Turkish economy, its central bank's willingness to respond to the downturn and the impact it could have on global financial markets, according to multiple reports.

This week was interesting also because, after several months, banking stocks showed some life, particularly SBI and ICICI Bank.

However, no one had ever anticipated such a situation, with the Turkish lira depreciated against the dollar by about 40% only within 2 months, whereas the devaluation on an annual basis was over 80%.

Additionally, on Friday President Donald Trump tweeted that he is increasing tariffs on US imports of Turkish of steel and aluminum.

USA manufacturers that import steel from Turkey have been benefiting from the rising value of the dollar against the Turkish lira, which climbed to a fresh all-time high Friday.

In 2017, 19 billion dollars worth of goods were traded between the USA and Turkey. Financial upheaval risks further destabilising an already volatile region.

Trump tweeted on Friday that he would be doubling existing tariffs on steel and aluminum imports from Turkey. He threatened the United States with an "Ottoman slap" if they continue to stand in the way of the Turkish incursion into northwest Syria.

"We are gearing up for trade in national currencies with China, Russia, Iran, Ukraine, which account for the largest bilateral trade volume".

Turkey's currency fell Friday after its economy was rattled by the United States' move to slap the country with more tariffs.

Trump announced the punitive doubling of steel tariffs, which were imposed in protest over the detention of Andrew Brunson, a pastor, who was arrested on terrorism charges after the attempted coup against Erdogan in 2016, saying: "Our relations with Turkey are not good at this time!".

"Change the euros, the dollars and the gold that you are keeping beneath your pillows into lira at our banks".

Meanwhile, Ankara is wanting the extradition of Fethullah Gulen, a Pennsylvania-based cleric who is blamed by Mr Erdogan for masterminding the 2016 coup.

In a separate opinion piece in the pro-government newspaper Daily Sabah, Erdogan's spokesman Ibrahim Kalin said Turkey's efforts to solve the crisis with diplomatic methods had been dismissed by the Trump administration, warning that "the USA runs the risk of losing Turkey" as an ally.

The Canadian dollar weakened to a more-than two-week low against its US counterpart as geopolitical risk rattled global financial markets, offsetting stronger-than-expected domestic jobs data.

After nearly 20 months in a Turkish jail, Mr Brunson was moved to house arrest last month by a court.

His cause resonates with Trump's Christian conservative supporters, who could be influential as Republicans seek to retain control of Congress in midterm elections in November.