‘If they have dollar, we have our Allah’: Erdogan

The euro has dropped today after the Turkish lira ad Russian rouble plummeted

The euro has dropped today after the Turkish lira ad Russian rouble plummeted

Turkish President Recep Tayyip Erdogan won another term in office in June with expanded powers.

In a day of extraordinary volatility the lira lost as much as 20 percent, crashing to a record low of 7 to the dollar, before paring losses to trade at 6.36 at 1513 GMT.

On Friday, the euro sagged to a 13-month low against the dollar, down 0.7 per cent to $1.1450, after the Financial Times reported that the European Central Bank was anxious about possible losses at eurozone banks operating in Turkey. USA stocks were also rattled.

The new tariffs announced on Friday come as the U.S. increases pressure for the release of American pastor Andrew Brunson, who has been in Turkish custody since 2016 on charges of espionage.

"Our relations with Turkey are not good at this time!" he added.

He said: 'There is definitely contagion from Turkey across emerging markets.

Turkey said it would respond to the new USA tariff action "without delay" and warned the move would further harm relations between the two countries.

The US has demanded the release of Andrew Brunson and on Friday doubled tariffs on steel and aluminium imports. The White House said he had authorized them under a section of USA trade law that allows for tariffs on national security grounds.

"Repeated efforts to communicate to the U.S. administration that none of the stated criteria driving America's tariffs are applicable to Turkey have thus far proven fruitless", he said.

In a separate opinion piece in the pro-government newspaper Daily Sabah, Erdogan's spokesman Ibrahim Kalin said Turkey's efforts to solve the crisis with diplomatic methods have been dismissed by the Trump administration, warning that Washington might completely lose Ankara as an ally. He denies the charges.

A delegation of Turkish officials held discussions with their counterparts in Washington this week but there was no sign of a breakthrough.

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"In the 1970s, the Turkish government stepped in to prevent massacres of ethnic Turks by the Greek Cypriots despite Washington's objections", he said, warning that unilateral action against Turkey will hurt American interests in the region.

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. This is a domestic and national struggle".

"Some countries have engaged in behavior that protects coup plotters and knows no laws or justice", he said. The president - instead of reassuring the markets, whose collapsing confidence is one of the main drivers behind the lira's unprecedented depreciation - slammed Western countries and accused them of waging economic warfare on Turkey.

"Failure to reverse this trend of unilateralism and disrespect will require us to start looking for new friends and allies", he added.

Analysts suggest Erdogan could have Washington in mind, given Ankara is demanding the extradition of USA -based Turkish cleric Fethullah Gulen, who is blamed for masterminding the botched 2016 military takeover.

The United States is the biggest destination for Turkish steel exports with 11 percent of the Turkish export volume.

"There are historical and geopolitical reasons for limits with relations with Moscow, limits I think we've reached", said global relations expert Soli Ozel of Istanbul's Kadir Has University.

Ivo Daalder, a former United States ambassador to North Atlantic Treaty Organisation and now president of the Chicago Council on Global Affairs think-tank, said Turkey could grind decision-making at Nato's headquarters in Brussels to a halt if the dispute with Trump got out of hand.

Ankara wants the United States to extradite Fethullah Gulen, a Pennsylvania-based cleric who Turkish authorities say masterminded the 2016 coup attempt in which 250 people were killed. Another stumbling block is the human rights issue and the arrest of American pastor Andrew Brunson by the Turkish police. He offered no further details.

Neil Wilson, chief markets analyst at trading platform markets.com, said that the financial markets faced their most serious threat since the debt crisis that engulfed Eurozone states following the financial meltdown.

Erdogan enjoys the support of many Turks even though food, rent and fuel prices have all surged.

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