Turkey's Tayyip Erdogan dismisses lira fears, says "we have our God"

11 Agosto, 2018, 01:40 | Author: Arnold Perez
  • Andrew Brunson an American pastor is released to home detention last month in Izmir Turkey

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On Friday morning, the Turkish lira plunged by over 20% against the USA dollar, into record low territory, extending the currency's spiraling decline of the past several years.

President Trump said Friday the US will double tariffs on steel and aluminum for Turkey, noting the relationship between the two states "are not good at this time!".

FILE PHOTO: A worker checks coils of steel at Turkish steel manufacturer ISDEMIR in Iskenderun in Hatay province, Turkey May 6, 2010.

Trump's tweet sent the already-depreciating Turkish lira into free fall, and appeared to bring other developing market currencies - and the euro - down with it.

Investors piled into "safe" government debt, with German yields hitting three-week lows and the yield on the benchmark USA 10-year Treasury note falling to 2.88822 percent.

A plunge in the Turkish lira rocked global equities and emerging markets on Friday and fear of more turmoil sent investors scurrying for safety in assets like the yen and USA government bonds.

Erdogan's characteristic defiance in the face of the crisis has further unnerved investors.

"Change the euros, the dollars and the gold that you are keeping beneath your pillows into lira at our banks. It is a national fight", he said.

Economist Chad Bown, who specializes in trade issues, said Turkey accounted for just over four percent of United States steel imports in 2017, but a very small fraction of the aluminum brought into the country.

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Still, analysts said the lira's plunge which took it down almost 20 percent against the dollar on the day in the European afternoon, was dramatic, with analysts trying to recall when they last saw anything like it.

The NATO allies are at odds over the detention in Turkey of United States evangelical pastor Andrew Brunson on terrorism charges.

Mr Trump said he had authorised a 20% duty on aluminium and 50% on steel. It came as a Turkish delegation returned from the United States, reporting no progress on negotiations involving a US pastor imprisoned in Turkey.

But Erdogan said Turks should not be alarmed by exchange rate movements.

Treasury and Finance Minister Berat Albayrak says Turkey will execute a new economic model with all market stakeholders and also carry out tight monetary and fiscal policy.

Pressure on Turkey is also coming from US Congress that moved late last month to block further F-35 deliveries to Turkey until it cancels the S-400 defence system deal with Russian Federation and Brunson is released.

It added that Trump´s remarks were "not possible to reconcile with state seriousness". The lack of central-bank action to support the currency is also spooking investors and Erdogan's previous comment that interest rates are the "mother and father of all evil" hasn't helped.

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

His finance minister later promised that the central bank would remain independent and that inflation would come down.

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