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Erdogan says attempts to exert economic pressure on Turkey futile

10 August 2018

President Trump ordered a doubling of USA tariffs on steel and aluminum imports from Turkey Friday, escalating a diplomatic spat with a key North Atlantic Treaty Organisation ally.

Amid a steep drop in Turkey's currency, the Lira, the president announced on Twitter Friday that he has given the greenlight to sharply increased tariffs.

Turkey's embattled lira on Friday hit new record lows against the U.S. dollar and euro, losing over seven percent in value as strains with the United States showed no sign of abating and fears grew over the exposure of European banks. Trump wrote. "Aluminum will now be 20% and Steel 50%".

Even before Trump's announcement, President Tayyip Erdogan told Turks to exchange gold and dollars for lira in order to fight "an economic war".

New Finance Minister Berat Albayrak - Erdogan's son-in-law - acknowledged that the central bank's independence was critical for the economy, promising stronger budget discipline and a priority on structural reforms.

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The unorthodox approach of the president, who has dominated Turkish politics for more than 15 years, has unnerved investors who have voiced concerns over Turkey's authoritarian trajectory under Erdogan.

President Recep Tayyip Erdogan on Thursday portrayed the currency drop as a "campaign" to harm Turkey.

"Change the euros, the dollars and the gold that you are keeping beneath your pillows into lira at our banks". "Hopefully we will overcome this disaster and we will also successfully overcome this economic war", Erdogan said.

The Turkish lira has lost 13 per cent of its value against the dollar since midnight, pushing the battered currency further into crisis. "The dollar, the mollar, will not cut our path", said Erdogan using a figure of speech he repeatedly uses to mock something.

However, a defiant Erdogan brushed aside concerns, telling a roaring crowd of Turks in the Black Sea city of Rize not to worry.

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He said the lira's fall was being exacerbated by fears the central bank "isn't being permitted to raise interest rates".

The dollar rose as exposure to Turkey could impact European banks and spark a domino effect throughout Europe as people begin to pull out of those banks and into the USA, said Gregan Anderson, macroeconomic strategist at brokerage Bulltick LLC. "Selling more elsewhere would offset some of the hypothetical decline in eurozone exports to Turkey". In response, the currency renewed its sell-off.

The turmoil threatens to scare away the foreign capital that Turkey depends on to finance its large external deficit, and hampers companies' ability to repay foreign-currency loans.

Markets are anxious about a deepening fallout between Washington and Ankara over the detention of USA pastor Andrew Brunson on terror charges, as well as other issues. The currency has fallen more than 35 percent this year after losing almost a quarter of its value in 2017. A delegation of Turkish officials held talks with their counterparts in Washington this week but there was no sign of a breakthrough. "Look at what we were 16 years ago and look at us now".

'However, I say it once again from here.

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Erdogan says attempts to exert economic pressure on Turkey futile