ISTANBUL/WASHINGTON: President Tayyip Erdogan told Turks to sell their gold and dollars to support the crumbling lira, with the currency in free fall as President Donald Trump escalated a feud with Ankara by doubling tariffs on metals imports.
The lira has long been falling on worries about Erdogan’s influence over monetary policy and worsening relations with the United States. That turned into a rout on Friday, with the currency diving as much as 18 per cent at one point, the biggest one-day drop since a 2001 financial crisis in Turkey.
Reverberations spread through global markets, with European stock markets especially hit as investors took fright over banks’ exposure to Turkey. US stocks were also rattled.
The lira, which has lost more than 40 per cent this year, hit a new record low after Trump announced he would punish Ankara in a wide-ranging dispute. He said he had authorised higher tariffs on imports from the United States’ Nato ally, imposing duties of 20 per cent on aluminium and 50 per cent on steel.
The lira, he noted on Twitter, “slides rapidly downward against our very strong Dollar!”
“Our relations with Turkey are not good at this time!” he wrote.
An important emerging market, Turkey borders Iran, Iraq and Syria and has been mostly pro-Western for decades. Financial upheaval there risks further destabilising an already volatile region.
Without naming countries, Erdogan said supporters of a failed military coup two years ago, which Ankara says was organised by a US-based Muslim cleric, were attacking Turkey in new ways since his re-election two months ago.
Although Erdogan struck a defiant tone and warned of “economic war,” his foreign ministry called for diplomacy and dialogue to solve problems with Washington and Trade Minister Ruhsar Pekcan said “we implore President Trump to return to the negotiating table.”
The new duties on Turkey are double the level that Trump imposed in March on steel and aluminium imports from a range of countries. The White House said he had authorised them under Section 232 of US trade law, which allows for tariffs on national security grounds.
Turkey’s trade ministry said the tariffs were against World Trade Organisation rules.
While Turkey and the United States are at odds over a host of issues, the most pressing disagreement has been about the fate of American Christian pastor Andrew Brunson, who is on trial on terrorism charges for allegedly supporting a group that Ankara blames for the failed coup. He denies the charges. Turkish officials held talks in Washington last week but there was no breakthrough. — Reuters
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