Published: Sat, August 11, 2018
Economy | By

Higher US tariffs increase pressure on Turkish economy

Higher US tariffs increase pressure on Turkish economy

Turkish President Recep Tayyip Erdogan and his newly appointed finance minister, Berat Albayrak, are due to speak at 2 p.m. local time Friday.

President Trump has doubled USA tariffs on Turkish steel and aluminium, as the precipitous fall of the Turkish lira accelerates.

Last week, Erdogan called on Turks to convert their foreign currency and gold into Turkish lira to help the currency. Speaking in the northeastern province of Gumushane, Erdogan said, "Apparently, those who believe they can force us to capitulate don't know [our] people at all". United States stocks were also rattled.

It argued that the country accounted for less than 2 percent of group revenues and a 10 percent fall in the lira would affect its CET1 ratio - capital that must be set aside as a buffer against financial shocks - by only around 2 basis points.

He cautioned that a banking crisis in Turkey could have "some negative repercussions" on eurozone banks that loaned money there or own Turkish banks.

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 US will also double tariffs on steel and aluminum imported from Turkey as relations between the North Atlantic Treaty Organisation allies worsen.

Earlier this week, a Turkish delegation returned from Washington with no movement on the detention of American pastor Andrew Brunson, who is under house arrest in Turkey on terrorism charges.

Paul Greer at Fidelity International said dramatic interventions were now needed as Turkey faced a "downward spiral" of investor confidence.

State Department Spokesperson Heather Nauert told reporters on August 9 that the United States would define progress in relations with Turkey with Brunson's return to the United States.


Investors dumped euro zone bank shares on Friday on concerns about their exposure to Turkey as the lira fell to yet another record low with a defiant government showing few signs it is ready to take decisive steps to stabilise the currency. The NATO allies are at odds over the detention in Turkey of United States evangelical pastor Andrew Brunson on terrorism charges.

The recent plunge comes after a Turkish delegation in Washington failed to stop the United States from imposing sanctions against two senior ministers.

Meanwhile, investors are anxious about the economic policies of President Recep Tayyip Erdogan, who won a new term in office in June with sweeping new powers.

A statement from the Kremlin said the two leaders discussed economic and trade ties.

"Don't forget, if they have their dollars, we have our people, our God", he said.

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

"It is hard to imagine how the United States and Turkey fix their relationship, which was already faltering, after this episode". Inflation increased 16 percent in July, and Erdogan has insisted that interest rates not increase.

"The price of the food that I buy increases day by day, the fuel that I put in my auto to distribute lunches is more expensive, but I can not raise my prices from one day to the next, " she said. At one point, it was down as much as 19 percent on the day, before rallying a bit to bring it to "only" a 13.7 percent loss.

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