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Turkish Lira Falls As Trump Doubles Metals Tariffs

Turkish Lira Falls As Trump Doubles Metals Tariffs

Turkish President Recep Tayyip Erdogan warned the USA on Saturday that his country does not respond to threats, a day after President Donald Trump sent the lira into freefall by announcing he would double the rate of import tariffs on Turkish metals.

The two countries had failed to agree on a deal to free an American pastor charged with espionage in Turkey.

Turkey's central bank said on August 13 that it would provide liquidity and cut reserve requirements for Turkish banks to stop the slide in its currency.

Trump and Secretary of State Mike Pompeo have repeatedly called for his release, while Erdogan has said the US should respect Turkey's judicial process.

The lira has always been falling on worries about Mr Erdogan's influence over monetary policy and worsening relations with the United States.

Internal political turmoil, soaring inflation and a burgeoning conflict with Trump over a jailed American pastor combined to destroy confidence in the Turkish lira, which lost 20 percent of its value against the dollar at one point Friday, dropping it to a record low.

"I have just authorized a doubling of Tariffs on Steel and Aluminum with respect to Turkey as their currency, the Turkish Lira, slides rapidly downward against our very strong Dollar!" The currency has fallen more than 40 percent against the dollar this year, according to data provider FactSet. The decision marked a departure for the US, which has generally tried to calm global markets during times of financial turmoil in emerging markets, especially when investors are gripped by fear of contagion. But those talks on Thursday showed no signs of breakthrough.

The president is "not happy with Turkey's decision not to release Pastor [Brunson]", White House press secretary Sarah Sanders said.

Turkish President Recep Tayyip Erdogan is appealing for calm as the country's currency plunges, urging people to change foreign money into local lira. She called on Trump to return to the negotiating table, saying "this can and should be resolved through dialogue and cooperation".

Mr Erdogan said during an address to supporters: "Change the euros, the dollars and the gold that you are keeping beneath your pillows into lira at our banks".

Experts have been questioning the real intention of USA tariffs, which are based on Section 232 of the Trade Expansion Act of 1962, a domestic legislation that justifies the imposition of duties over national security concerns. His comments on interest rates - and his recent appointment of his son-in-law as finance minister - have heightened perceptions that the central bank is not independent.

Turkey also wants the United States to extradite Fethullah Gulen, a Pennsylvania-based Muslim cleric who Turkish authorities say masterminded the coup attempt against Erdogan in which 250 people were killed.

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