Trump doubles tariffs on Turkey, sending lira crashing

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European and American bank stocks declined on concerns about their exposure to Turkey.

U.S. President Donald Trump ramped up his attack on Turkey by raising steel and aluminium tariffs to 50 percent and 20 percent respectively.

Harsher US tariffs were likely to punish Turkey's already faltering steel exports to the United States.

"US and Turkey are breaking up", Mr Cook told The National, recommending that Washington instead focuses on "how the tanking of the Lira affects other emerging market currencies, and moving to contain the contagion".

The lira plunged to as low as 6 against the USA dollar on Friday, a day after a Turkish delegation returned from talks in Washington with no apparent solutions to their simmering crisis. To do that, they have to sell lira - worsening the rout.

The situation was compounded on Friday when US President Donald Trump tweeted that he had authorised a doubling of tariffs on steel and aluminium.


Exchange-rate volatility not only complicates loan repayments, it also drives inflation higher and erodes the value of existing loans in the local currency. Speaking in the northeastern province of Gumushane, Erdogan said, "Apparently, those who believe they can force us to capitulate don't know [our] people at all".

Securing the release of Brunson, arrested in 2016, is a top priority for the United States, and it is also tussling with Turkey over the detention of three locally employed USA embassy staff, trade issues and differences over Syria.

Turkey's embattled lira on Friday hit new record lows against the USA dollar and euro, losing over seven percent in value as strains with the United States showed no sign of abating and fears grew over the exposure of European banks.

The Lira has plunged 66% since the start of the year, pushing up the cost of goods for Turkish people and shaking worldwide investors' confidence in the country.

The Turkish lira fell around 16% against the USA dollar on the day, from $0.18 to $0.15 as of 3pm BST.

The lira "is falling so fast that a parachute is the first thing that comes to mind to prevent the lira smashing into the ground", Bart Hordijk, a market analyst at Monex Europe, said in an email.


The U.S. has made a decision to sanction a North Atlantic Treaty Organisation ally - absolutely remarkable.

In what appears to be a diplomatic riposte, Turkey later said Erdogan had held a phone call with Russian President Vladimir Putin to discuss economic ties.

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.

The lira has lost more than 40 percent this year.

More evidence of how nervous investors are about Turkey's economy could be seen in the iShares MSCI Turkey exchange-traded fund, which plunged 18% and saw the most premarket trades ever, according to Bloomberg. "Don't heed them", Erdogan said Thursday. He has urged the central bank to not raise interest rates. High level meetings in Washington between USA and Turkish officials ended this week without an apparent resolution. Inflation increased 16 percent in July, and Erdogan has insisted that interest rates not increase.


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