Turkey's President Erdogan claims currency crisis is 'national battle'

Turkey's President Erdogan claims currency crisis is 'national battle'

Turkey's President Erdogan claims currency crisis is 'national battle'

Compounding the situation, president Donald Trump doubled the tariffs applied to Turkish aluminium and steel, as a Turkish delegation failed to reach a compromise with United States authorities.

A financial shockwave ripped through Turkey on Friday, when its currency nosedived on concerns about its economic policies and a dispute with the US, which President Donald Trump stoked further with a promise to double tariffs on the North Atlantic Treaty Organisation ally.

Turkey vowed retaliation "without delay" and warned the move would further harm relations between the two allies.

Mr Trump's tweet caused a further drop in the Turkish currency, which is now down 13% on the day.

Erdogan has cast the sell-off in the currency that has followed the trade row as an economic war and an attempt to undermine Turkey's economy. She called on Trump to return to the negotiating table, saying "this can and should be resolved through dialogue and cooperation".

Trump made his unexpected announcement on Twitter from his golf club in Bedminster, New Jersey, as the Turkish currency, the lira, fell to all-time lows against the USA dollar.

In a tweet, Foreign Ministry Spokesman Hami Aksoy said President Donald Trump's decision, which also violates the rules of World Trade Organization, "cannot be associated with seriousness expected from a state".

President Erdogan has cast the recent slide in the lira as a war and without naming countries said supporters of a failed military coup 2 years ago, which Ankara says was organized by a US-based Muslim cleric, were attacking Turkey in new ways since his re-election 2 months ago.

Separately, Pekcan's ministry said the tariffs were a violation of World Trade Organization rules and that it would defend Turkish producers' rights at the trade body and other worldwide platforms. "Threats, sanctions and bullying against Turkey will not work", he said.


"President Erdogan's strengthened powers under the new presidential system have made it increasingly uncertain whether policymakers will be able to act to stabilize the economy", William Jackson, the chief emerging markets economist at Capital Economics in London, said.

The United States is the biggest destination for Turkish steel exports with 11 percent of the Turkish export volume. "This is a national, domestic battle", he told a crowd in the northeastern city of Bayburt.

Erdogan, a self-described "enemy of interest rates", wants cheap credit from banks to fuel growth, but investors fear the economy is overheating and could be set for a hard landing.

"Change the euros, the dollars and the gold that you are keeping beneath your pillows into lira at our banks".

Independent analysts argue the central bank should instead raise rates to tame inflation and support the currency. Hard currency debt issued by Turkish banks suffered similar falls.

Albayrak was speaking at a conference where he outlined his ministry's "new economic policy" as the currency plunged, raising questions about the country's financial stability.

The sharp decline of the lira, and worries over the wider consequences of Turkey's economic turmoil, helped drive the main stock indexes in Tokyo, Frankfurt and Paris more than 1 percent lower.

"I'm not aware of any prior administration using tariffs in this way, and there's a very simple reason: because they're an incredibly blunt instrument that often can have blowback on American workers and consumers as we've seen in the China context", said Ned Price, a former Central Intelligence Agency officer who also served as a National Security Council spokesman during the Obama administration.

The trade actions "threaten important energy infrastructure projects", said Catherine Landry, a vice president at trade group Interstate Natural Gas Association of America.

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