{"id":11084,"date":"2018-08-10T18:23:50","date_gmt":"2018-08-10T18:23:50","guid":{"rendered":"http:\/\/qatar-news.org\/qatarnewsEn\/?p=11084"},"modified":"2018-08-10T18:23:50","modified_gmt":"2018-08-10T18:23:50","slug":"erdogan-tells-turks-to-buy-plunging-lira-as-trump-doubles-metals-tariffs","status":"publish","type":"post","link":"https:\/\/qatar-news.org\/qatarnewsEn\/?p=11084","title":{"rendered":"Erdogan tells Turks to buy plunging lira as Trump doubles metals tariffs"},"content":{"rendered":"
\n

\nISTANBUL\/ANKARA: President Tayyip Erdogan told Turks on Friday to exchange gold and dollars into lira as the country\u2019s currency plunged as much as 19 percent on worries about his influence over monetary policy and worsening relations with the United States.
US President Donald Trump said he had authorized higher tariffs on imports from Turkey, imposing a 20 percent duty on aluminum and 50 percent one on steel.
Trump noted on Twitter that the lira \u201cslides rapidly downward against our very strong Dollar!\u201c
\u201cOur relations with Turkey are not good at this time!\u201d he said in an early morning post.<\/p>\n

\n

I have just authorized a doubling of Tariffs on Steel and Aluminum with respect to Turkey as their currency, the Turkish Lira, slides rapidly downward against our very strong Dollar! Aluminum will now be 20% and Steel 50%. Our relations with Turkey are not good at this time!<\/p>\n

\u2014 Donald J. Trump (@realDonaldTrump) August 10, 2018<\/a>\n<\/p><\/blockquote>\n

\nWaves from the crisis spread abroad, with investors selling off shares in European banks with large exposure to the Turkish economy.
\n
\nNew Finance Minister Berat Albayrak \u2014 Erdogan\u2019s son-in-law \u2014 acknowledged that the central bank\u2019s independence was critical for the economy, promising stronger budget discipline and a priority on structural reforms.
\n
\nThe lira sell-off has deepened concern about exposure to Turkey, particularly whether over-indebted companies will be able to pay back loans taken out in euros and dollars after years of overseas borrowing to fund a construction boom under Erdogan.
\n
\nErdogan\u2019s characteristic defiance in the face of the crisis has further unnerved investors. The president, who says a shadowy \u201cinterest rate lobby\u201d and Western credit ratings agencies are attempting to bring down Turkey\u2019s economy, appealed to Turks\u2019 patriotism.
\n
\n\u201cIf there is anyone who has dollars or gold under their pillows, they should go exchange it for liras at our banks. This is a national, domestic battle,\u201d he told a crowd in the northeastern city of Bayburt. \u201cThis will be my people\u2019s response to those who have waged an economic war against us.\u201d
\n
\nThe lira, which has lost a third of its value this year, fell on his comments and was trading at around 6.6 to the dollar after he spoke, nearly 9 percent weaker on the day. \u201cThe dollar cannot block our path. Don\u2019t worry,\u201d Erdogan assured the crowd.
\n
\nThat is unlikely to mollify investors who are also worried by a growing dispute with the United States. The NATO allies are at odds over the detention in Turkey of US evangelical pastor Andrew Brunson on terrorism charges.
\n
\nTENSION WITH WASHINGTON
\n
\nThe tensions with Washington have, for investors, underscored Turkey\u2019s authoritarian trajectory under Erdogan.
\n
\n\u201cThe basic reason the exchange rate has gone off the rails is that confidence in the management of the economy has disappeared both domestically and abroad,\u201d said Seyfettin Gursel, a prominent economist and a professor at Turkey\u2019s Bahcesehir University.
\n
\n\u201cFirst of all, confidence needs to be regained. It is obvious how it will be done: since the final decision-maker of all policies in the new regime is the president, the responsibility of regaining confidence is on his shoulders.\u201d
\n
\nThe lira briefly fell as much as 14.6 percent \u2014 its biggest one-day drop since early 2001 \u2014 before paring losses. Shares of European lenders also dropped, hit by concern about their Turkish exposure.
\n
\nTurkey\u2019s sovereign dollar-denominated bonds tumbled with many issues trading at record lows. Hard currency debt issued by Turkish banks suffered similar falls.
\n
\nMeanwhile the cost of insuring exposure to Turkey\u2019s sovereign debt through five year credit defaults swaps has spiralled to the highest level since March 2009, topping levels seen for serial defaulter Greece , which has three bailouts in the last decade.
\n
\nDRASTIC
\n
\nPresenting the government\u2019s new economic model, Albayrak said the next steps of rebalancing would entail lowering the current account deficit and improving trust.
\n
\nThere would be a transformation in the finance ministry with regards to taxation, he said. His comments did nothing to shore up the lira currency. It fell yet further to 6.2 to the dollar at 1254 GMT, nearly 12 percent weaker on the day.
\n
\nThe currency has fallen more than 35 percent this year after losing nearly a quarter of its value in 2017. This week alone, it has lost about 15 percent. Such relentless depreciation drives up the cost of imported goods from fuel to food for ordinary Turks.
\n
\n\u201cThe situation of Turkey cannot go on for much longer \u2014 I think they will have to intervene,\u201d Cristian Maggio, head of emerging markets strategy at TD Securities, adding that the intervention needed to be \u201cdrastic.\u201d
\n
\n\u201cTurkey is playing a very dangerous game. They keep lagging behind the curve and the pace of the depreciation and the penalty that the market inflicts on Turkey when it sells off is increasing at a more than linear pace, almost exponentially.\u201d
\n
\nErdogan, a self-described \u201cenemy of interest rates,\u201d wants cheap credit from banks to fuel growth, but investors fear the economy is overheating and could be set for a hard landing. His comments on interest rates \u2014 and his recent appointment of his son-in-law as finance minister \u2014 have heightened perceptions that the central bank is not independent.
\n
\nThe central bank raised interest rates to support the lira in an emergency move in May, but it did not tighten at its last meeting.
\n
\nNO BREAKTHROUGH
\n
\nWhile Turkey and the United States disagree over a host of issues, the most pressing disagreement has been over Brunson and the detention of other US citizens in Turkey. A delegation of Turkish officials held talks with their counterparts in Washington this week but there is no sign of a breakthrough.
\n
\nWhile there was no statement from the Turkish side, US State Department spokesperson Heather Nauert said wide-ranging conversations had been held.
\n
\n\u201cI would say we would define progress as Pastor Brunson being brought home,\u201d Nauert said.<\/p>\n<\/div>\n","protected":false},"excerpt":{"rendered":"

ISTANBUL\/ANKARA: President Tayyip Erdogan told Turks on Friday to exchange gold and dollars into lira as the country\u2019s currency plunged as much as 19 percent on worries about his influence over monetary policy and worsening relations with the United States.US President Donald Trump said he had authorized higher tariffs on imports from Turkey, imposing a…<\/p>\n","protected":false},"author":10,"featured_media":11085,"comment_status":"open","ping_status":"closed","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[2],"tags":[],"class_list":["post-11084","post","type-post","status-publish","format-standard","has-post-thumbnail","hentry","category-middle_east_news"],"_links":{"self":[{"href":"https:\/\/qatar-news.org\/qatarnewsEn\/index.php?rest_route=\/wp\/v2\/posts\/11084","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/qatar-news.org\/qatarnewsEn\/index.php?rest_route=\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/qatar-news.org\/qatarnewsEn\/index.php?rest_route=\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/qatar-news.org\/qatarnewsEn\/index.php?rest_route=\/wp\/v2\/users\/10"}],"replies":[{"embeddable":true,"href":"https:\/\/qatar-news.org\/qatarnewsEn\/index.php?rest_route=%2Fwp%2Fv2%2Fcomments&post=11084"}],"version-history":[{"count":0,"href":"https:\/\/qatar-news.org\/qatarnewsEn\/index.php?rest_route=\/wp\/v2\/posts\/11084\/revisions"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/qatar-news.org\/qatarnewsEn\/index.php?rest_route=\/wp\/v2\/media\/11085"}],"wp:attachment":[{"href":"https:\/\/qatar-news.org\/qatarnewsEn\/index.php?rest_route=%2Fwp%2Fv2%2Fmedia&parent=11084"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/qatar-news.org\/qatarnewsEn\/index.php?rest_route=%2Fwp%2Fv2%2Fcategories&post=11084"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/qatar-news.org\/qatarnewsEn\/index.php?rest_route=%2Fwp%2Fv2%2Ftags&post=11084"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}