Erdogan says lira crash 'political plot' against Turkey

by Abel Hampton August 13, 2018, 1:32
Erdogan says lira crash 'political plot' against Turkey

Since some of Turkey's debt is in dollars, it's also making the country's financial situation worse.

The lira tumbled 13% in one day, to 6.51 per U.S. dollar, a massive move for a currency that will make the Turkish poorer and further shake worldwide investors' confidence in the country.

Javad Zarif said there was no meeting planned with USA officials including his counterpart Mike Pompeo at the United Nations General Assembly, the semi-official news agency Tasnim reported on Saturday.

The accelerated lira sell-off also deepened concerns about the exposure of banks to Turkey, particularly whether highly indebted companies would be able to pay back loans taken out in dollars and euros after years of overseas borrowing to fund a construction boom under Turkish President Tayyip Erdogan.

The diplomatic dispute with the United States was one of the triggers for the turmoil this week.

Turkey will "never accept the order, which declares war against the whole world", through the threats of sanctions, he said, referring to the U.S. Mr. Trump tweeted Friday morning.

Mr Trump intensified his spat with Turkey by imposing the higher tariffs, putting unprecedented economic pressure on a North Atlantic Treaty Organisation ally and deepening turmoil in Turkish financial markets.

Relations between the two countries deteriorated in the wake of US President Donald Trump's decision to increase tariffs on Turkish aluminum and steel to 20% and 50% respectively.

"Before it is too late, Washington must give up the misguided notion that our relationship can be asymmetrical and come to terms with the fact that Turkey has alternatives. The economy's nosedive comes as President Trump doubled tariffs on Turkish steel and aluminium, further hurting the lira.

Turkey vowed retaliation "without delay" and warned the move would further harm relations between the two allies. He said this during a speech in the town of Unye (Turkey).

Meanwhile, markets are deeply concerned over the direction of economic policy under President Recep Tayyip Erdogan, with inflation at almost 16%, but the central bank reluctant to raise rates in response.

Take them immediately to the banks and convert them into liras. "This is a national, domestic battle", he told a crowd in the northeastern city of Bayburt, according to Reuters.

In July, US President Donald Trump threatened to impose large sanctions on Turkey if he refused to free Brunson, and on 1 July announced economic punishments against Turkish Justice Ministers Abdulhamit Gül and Interior Minister Suleyman Soylu.

On Thursday, Mr Erdogan said: "If they have their dollar, we have the people, we have Allah". Turkey has, without success, requested that the U.S. extradite Fethullah Gulen, who lives in Pennsylvania.

"One of our principles will be ensuring the full independence of monetary policy", Mr Abayrak said as he outlined his ministry's "new economic model".

This economic uncertainty had rattled Turkey's already shaky economy, and the lira had dropped a number of times since the beginning of August.

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