Published: Mon, August 13, 2018
Markets | By Jeffery Armstrong

Lira fall a political plot, says Erdogan

Lira fall a political plot, says Erdogan

The embattled lira tumbled 16 percent against the dollar on Friday, with US President Donald Trump saying he had doubled steel and aluminium tariffs on Turkey in comments that contributed to the currency´s further slide.

Relations between the two North Atlantic Treaty Organisation allies have taken a turn for the worse amid dispute over the detention in Turkey of USA evangelical pastor Andrew Brunson on terrorism charges.

The embattled Turkish lira tumbled nearly 20 percent to new record lows against the dollar on Friday as strains with the United States intensified, but President Recep Tayyip Erdogan defiantly proclaimed Turkey would emerge victorious in an "economic war".

All eyes will be on the lira when foreign exchange markets reopen on Monday after the weekend pause.

The Turkish lira has fallen more than 10 percent since last week when the United States slapped sanctions on two Turkish ministers.

Turkish President Recep Tayyip Erdogan is continuing his pushback against United States actions that now have investors concerned as the nation inches closer to a financial crisis, according to Bloomberg. "Nobody should try to make us fall into this trap, we won't be fooled by this plot. With God's permission we will overcome this", he added.

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ISTANBUL-Turkish President Recep Tayyip Erdogan says he stands by his opposition to high interest rates, amid sharp declines in the value of the lira, saying the currency's weakness doesn't reflect the country's economic realities.

The pastor has been accused of links to US-based Muslim preacher Fethullah Gulen, who Ankara blames for the attempted coup, along with ties to the banned Kurdish militant group the Kurdistan Workers' Party (PKK). Trump has described his detention as a "total disgrace" and urged Erdogan to free him immediately.

Last week, a Turkish delegation went to Washington and met with US counterparts, but there was no breakthrough.

"The White House has said the newly-imposed sanctions would take effect from August 13". Erdogan asked Washington. "What happened to you now?"

"Even in the unlikely event that Turkey resolves its diplomatic row with the United States, downside concerns towards the lira won't ease", said Takahiko Sasaki, market economist at Mizuho Bank.

Erdogan, who has called himself the "enemy of interest rates", wants cheap credit from banks to fuel growth.

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He also branded interest rates as a "tool of exploitation" which should be kept as low as possible.

And the Brunson case is just one of many bones of contention between Turkey and the United States, ranging from Syria to Ankara's increasingly cosy relationship with Moscow.

Mr. Erdogan's remarks also knocked back investors' expectations of a rate hike from the central bank.

"You arrest my Halkbank general deputy director?"

"It is wrong to dare bring Turkey to its knees through threats over a pastor", Erdogan told a rally in the Black Sea town of Unye.

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