Turkish lira slumps to new record low as Donald Trump doubles tariffs

Turkey to reveal 'new economic model' on Friday

Turkish lira tumbles to fresh low | Business

That turned into a rout on Friday, with the lira diving more than 18 percent on the day and more than 40 percent this year to a new record low after Trump took steps to punish Turkey in a wide-ranging dispute.

Trump said Friday on Twitter that he authorized a new 20 percent tariff on aluminum and 50 percent tariff on steel from Turkey. Our relations with Turkey are not good at this time!' Trump and Vice President Mike Pence threatened on July 26 to impose sanctions on Turkey if the pastor is not set free and allowed to return to the United States.

Turkey, a North Atlantic Treaty Organisation ally, him on trial for espionage and terror-related charges linked to a failed coup attempt in the country two years ago.

The lira tumbled about 10 percent on Friday to another record low as investors anxious about Erdogan's unorthodox economic policies and USA sanctions.

Erdogan said during an address to supporters: "Change the euros, the dollars and the gold that you are keeping beneath your pillows into lira at our banks". The White House said he had authorized them under Section 232 of USA trade law, which allows for tariffs on national security grounds.

As President Erdogan continues to exert an iron grip on the government, economy, and people of Turkey, and the specter of a Turkish debt crisis continues to loom, the country's economy and currency are apt to remain under heavy pressure.

Erdogan framed Turkey's currency crisis as a "national battle" against economic enemies, namely the USA, saying "if they have their dollar, we have the people, we have Allah".

It all started with Turkey's own mistakes - or, more accurately, with Turkish President Recep Tayyip Erdogan's. "This is a national, domestic battle", he told a crowd in the northeastern city of Bayburt.

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President Trump has authorized the doubling of steel and aluminum tariffs on Turkey amid heated tensions over detainment of an American pastor.

Turkey is front and center of the chaos on Friday, with its currency plunging to a record low against the USA dollar.

As well as the ongoing row with the U.S., the recent sell-off in the lira has been fuelled by investor concerns over Erdogan's grip on monetary policy under a new powerful executive presidency.

Turkey retaliated against the move by slapping import duties on $1.78 billion worth of US products, including coal, paper, nuts, whiskey, autos, machinery and petrochemicals. Erdogan's speech caused the value of the lira to drop even further. But experts argue that the central bank should instead raise interest rates to ease inflation and to support the currency. But since adopting increased powers, Erdogan appears to have greater control over the bank as well.

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. President Erdogan has pressured the central bank to maintain low interest rates by refraining from implementing much-needed hikes.

Russia struck back Friday, with Prime Minister Dmitry Medvedev saying that any move to rein in Russian banks or their foreign-currency dealings would be "economic war".

The lira was trading at 5.95 to the dollar, a loss on the day of 7.5 percent.

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