Turkish Currency Collapses After Trump Doubles Metals Tariffs

A vendor gets a five Euro bank note from a customer at the central market in Athens

A vendor gets a five Euro bank note from a customer at the central market in Athens Greece

President Trump ordered a doubling of USA tariffs on steel and aluminum imports from Turkey Friday, escalating a diplomatic spat with a key North Atlantic Treaty Organisation ally.

The US dealt Turkey and the lira a further blow in a tweet on Friday, in which Mr Trump said he had approved the doubling of tariffs on Turkish steel and aluminium. Trump said on Twitter.

The United States is the biggest destination for Turkish steel exports with 11 per cent of the Turkish export volume.

Trump is also declaring that, "Our relations with Turkey are not good at this time!".

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

Washington imposed the metals tariffs on national security grounds, claiming the glut of steel and aluminum harmed USA companies and the economy.

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

Erdogan said that there were "various campaigns being carried out" against the country.

"This will be my people's response to those who have waged an economic war against us", he said.

The drop in the lira has put increasing pressure on Turkish banks, given many companies have borrowed heavily in foreign currency.

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The Trump administration has called upon Erdoğan to release Brunson for months.

Canada's main stock index also fell on Friday.

The trouble is that for all of Albayrak's talk of Central Bank independence, Erdogan is fiercely opposed to any interest rate hikes, which are widely seen as necessary to stem the bleeding. On Friday morning, he told his followers in the remote eastern province of Bayburt that "the dollar or anything like it will not be able to stop us going on our way".

The currency drop is particularly painful for Turkey because the country finances a lot of its economic growth with foreign money. Turkey answered the March tariff announcement by placing its own tariffs on $267 million of US goods. Much to the opposition of members of Congress on both sides of the aisle and other member nations of NATO, Turkey announced plans to acquire a Russian missile defense system.

Andrew Brunson has been in Turkish custody since 2016, when he was arrested on charges of terrorism and support of a group held responsible for an attempted coup of Turkish President Recep Tayyip Erdogan.

The sudden announcement turned a run on the Turkish lira into a rout; it crashed more than 18 percent to a new record low against the dollar.

In Washington, where Turkey seems to have lost its friends and faces a passionate anti-Erdogan lobby of which the Gulenists are an important part, there may be wishful thinking that an economic collapse could sweep him from power. Furthermore, consternation in the U.S. Congress has led to a nascent bill that could limit Turkey's ability to obtain loans from any U.S. -based financial institutions.

And of course, Brunson and the other detainees, including local staff of the U.S. diplomatic mission and various persons thought in some cases to be Gulenist Turkish-Americans, would have to be released. Earlier, it had crashed some 12 percent through the 6.00 level for the first time in history, trading at one point at more than 6.20 lira per dollar.

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

On Friday, the euro sagged to a 13-month low against the dollar, down 0.7 per cent to $1.1450, after the Financial Times reported that the European Central Bank was anxious about possible losses at eurozone banks operating in Turkey.

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