Turkish lira hits record low amid financial panic, rising USA tensions

11 August, 2018, 20:39 | Author: Corey Lynch
  • An investor looks at an electronic board showing stock information at a brokerage house in Shanghai China. Aly Song Reuters  File

The Turkish lira hit a record low on Friday before Mr Trump's tweet, which also said "our relations with Turkey are not good at this time!".

Erdogan and his newly appointed finance minister, Berat Albayrak, are due to speak at 2 p.m. local time Friday.

The United States had warned it was reviewing Turkey's duty-free access to its markets, after Ankara imposed retaliatory tariffs on U.S. goods in response to American tariffs on steel and aluminium. Sanctions and pressure would only serve to harm ties between the two North Atlantic Treaty Organisation allies, Hami Aksoy also said in a statement.

Trump's tweet caused a further drop in the Turkish currency, which is now down 13 percent on the day.

President Recep Tayyip Erdogan is urging the Turkish people to exchange gold and hard currency into lira, after the currency hit a record low against the dollar today.

"Unless the United States starts respecting Turkey's sovereignty and proves that it understands the dangers that our nation faces, our partnership could be in jeopardy", the Turkish president stated.

It fell to a record low this morning, and has now dropped 18 per cent today to 6.5 lira to the dollar, compared with 5.5 lira last night, as a deepening monetary crisis and diplomatic relations with the United States deteriorated. "This is a domestic and national struggle".

Ankara is under pressure to adopt orthodox steps to protect the lira by aggressively increasing interest rates to rein in double-digit inflation, a move Erdogan has publicly opposed. "Nevertheless, we implore President Trump to resume negotiations".

Iran has also suffered from a major tumbling of its currency this year partly over reimposition of United States sanctions after Trump abandoned a 2015 nuclear deal.




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

The currency drop is particularly painful for Turkey because the country finances a lot of its economic growth with foreign money. There wasn't much Eurozone data released over the past week but the few reports we had were far from impressive as factory orders and industrial production in Germany tumbled.

New York | Stocks sold off around the world, with U.S. equities erasing what would've been a sixth weekly gain as Turkey's economic crisis deepened.

Ankara sent a delegation this week to Washington to meet with both the State and Treasury Departments to resolve some of the disputes but those talks showed no signs of breakthrough.

High-level meetings in Washington between US and Turkish officials over Brunson ended this week, apparently without a resolution. An IMF offer will come with strings attached - strings that Erdogan may find a violation of sovereignty - including demands to rein in the country's runaway inflation with higher interest rates.

Erdogan spoke briefly Thursday night and alluded to problems with the currency, saying "various campaigns" were underway, adding: "If they have dollars, we have our people, our righteousness and our God".

Turkey has had this sort of experience - a disastrous currency collapse shrinking its economy and impoverishing its citizens - several times before, most recently in February 2001.

Treasury and Finance Minister Berat Albayrak has vowed to execute Turkey's new economic model together with "all national and worldwide stakeholders", while stressing that a "decisive" approach and the Central Bank's independence would be maintained.

Without naming any country, Erdogan said that those - who stand against Turkey for the sake of small calculations - would pay the price.

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