Published: Sat, August 11, 2018
Markets | By Jeffery Armstrong

Turkish lira hits fesh low against dollar amid fears of European contagion

Turkish lira hits fesh low against dollar amid fears of European contagion

President TrumpDonald John TrumpKobach agrees to recuse himself from vote counting in Kansas GOP primary NFL players kneel during national anthem before first preseason game Schiff blasts GOP for Russian Federation probe conduct: "That's how you obstruct an investigation, not how you conduct one" MORE said Friday that the USA will also double tariffs on steel and aluminum imported from Turkey as relations between the North Atlantic Treaty Organisation allies worsen.

The lira accelerated its losses after US President Donald Trump said in a tweet he had authorised the doubling of aluminium tariffs on Turkey to 20% and steel tariffs to 50%.

USA sanctions and president Erdogan's tightening control over monetary policy are driving the fall, which sent the lira to an all-time low of above 6 to the dollar this morning.

Turkey remains at loggerheads with the United States in one of the worst spats between the two North Atlantic Treaty Organisation allies in years over the detention for the last two years of American pastor Andrew Brunson and a host of other issues.

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"There are several campaigns being carried out [against Turkey]".

Some economists were less impressed by the government's handling of the crisis.

"If there is anyone who has dollars or gold under their pillows, they should go exchange it for liras at our banks". The central bank, officially independent, appears to have heeded Erdogan and has not raised rates when many - including the International Monetary Fund - said it should have.

Turkey's lira and the Russian rouble were hit hardest, according to analysts, with the lira hitting a new record low against the USA dollar on Friday. "Look at what we were 16 years ago and look at us now", he said. This will be my people's response to those who have waged an economic war against us'. The fall of the lira has accelerated dramatically in 2018, but Friday's one-day collapse far eclipsed any previous slide. The S&P 500 lost 20.3 points, or 0.71 percent, to 2,833.28 and the Nasdaq Composite dropped 52.67 points, or 0.67 percent, to 7,839.11. The lira slid to a fresh record low against the USA dollar.

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The Turkish lira has fallen more than 10% against the dollar after a Turkish delegation in Washington failed to prevent U.S. sanctions.

Carl Bildt, the former prime minister of Sweden who is now co-chair of the European Council on Foreign Relations, tweeted on Friday: "To double key tariffs against an ally which is in a hard financial crisis is really brutal". Thus, Trump's tweet suggests that any country that enters a time of economic turmoil - and consequently, sees the value of its currency fall - is a fair target for punitive trade actions by the United States.

The latest escalation came as Turkey's Economy Minister Berat Albayrak, who is Erdogan's son-in-law and a trusted lieutenant, unveiled what was touted as a new economic plan, pledging Central Bank independence, tighter budget discipline and sustainable and healthy growth.

They are also concerned over the central bank's ability to rein in persistent double-digit inflation with the president repeatedly calling for lower rates.

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Coupled with an inflation rate of almost 16 percent, that could cause a lot of damage to the local economy.

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