ANKARA/ISTANBUL: The lira slid on Thursday after Turkey accused the United States of waging “economic war” amid a bitter standoff between the Nato allies over the fate of a Christian pastor.
Turkish President Tayyip Erdogan’s spokesman said Washington must respect the legal process concerning the pastor, Andrew Brunson, whose trial in Turkey has infuriated US President Donald Trump.
The lira dipped as far as 6.1350 against the dollar and was 0.7 per cent weaker on the day. The dollar was boosted by US Federal Reserve minutes indicating it would raise interest rates in September.
The lira is down 37 per cent this year, with the crisis in Turkish-US ties exacerbating losses prompted by concerns about Erdogan’s influence on monetary policy.
He says interest rates are the “mother and father of all evil” and opposes hiking them.
Economists said Turkey had still to convince investors it was ready to take measures needed to shore up its economy. “The problems of Turkey are not fixed,” said Cristian Maggio, head of emerging markets strategy at TD Securities. “There is not one single structural solution or reform that has been advanced or detailed by the local authorities.”
Maggio added that lira volatility had increased due to thin trading volumes as Turkish markets are closed all week for Eid al Adha.
Erdogan’s spokesman, Ibrahim Kalin, said that comments by Trump’s national security adviser showed the United States was targeting Turkey’s economy.
John Bolton said that Turkey had made a “big mistake” in not freeing Brunson. “The statement is proof that the Trump administration is targeting a Nato ally as part of an economic war,” Kalin said.
“The Trump administration has... established that it intends to use trade, tariffs and sanctions to start a global trade war.”
Until Kalin’s statement, Turkish officials had been silent about comments on Turkey this week by Trump and Bolton.
Trump said on Monday he would make no concessions to Ankara in return for Brunson’s release.
Brunson, who has lived in Turkey for two decades, has been detained for 21 months and is now under house arrest.
Trump, who counts evangelical Christians among his core voter base, has doubled tariffs on metal imports from Turkey, prompting Ankara to raise tariffs on US car and tobacco imports by the same amount.
Ankara has also initiated a WTO dispute complaint on the tariffs.
“Turkey will protect its national interests on every platform and work with the rest of the world against restrictive and punitive measures,” Kalin said.
“The steps we have taken to prevent an assault on the Turkish lira yielded positive results” and the Finance Ministry and other institutions will continue to “take precautions and protect our economy”, Kalin added.
— Reuters
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