Published: Sat, August 11, 2018
Finance | By Loren Pratt

Erdogan calls on Turks to buy lira 'in response to economic war'

Erdogan calls on Turks to buy lira 'in response to economic war'

US President Donald Trump said he had authorized higher tariffs on imports from Turkey, imposing a 20 percent duty on aluminium and 50 percent one on steel. Trump wrote on Twitter.

Waves from the crisis spread overseas, with investors selling off shares in European banks with large exposure to the Turkish economy.

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

The US, meanwhile, rates Turkey at level three, urging people to reconsider travel to the region.

The president's characteristic defiance in the face of a shaky economy has further unnerved investors.

Erdogan appealed to Turks to exchange dollars and gold for Turkish lira to support the plunging currency.

Without naming countries, Erdogan said supporters of a failed military coup two years ago, which Ankara says was organized by a US -based Muslim cleric, were attacking Turkey in new ways since his re-election two months ago to a new executive presidency. The lira has fallen about 40 percent against the dollar this year.

But President Erdogan brushed off any concerns during a speech in the northeastern city of Bayburt on Friday, saying: 'The dollar can not block our path. It followed a deepening rift with the United States, worries about its own economy and lack of action from policymakers.

"If they have their dollar, we have the people, we have Allah", he said, as the lira continued to fall.


Turkey's woes have been aggravated by investor worries about the economic policies of Mr Erdogan, who won a new term in office in June with sweeping new powers. But now, the relationship appears to have gone sideways.

"First of all, confidence needs to be regained". Shares of European lenders also dropped, hit by concern about their Turkish exposure.

As the lira plunged as much as 18pc against the dollar to record lows, fears mounted over the exposure European banks have to Turkey's huge burden of dollar-denominated debt. It is unclear how that would justify higher tariffs on Turkey but not other countries.

Albayrak, who formerly served as energy minister, on Friday announced what he has described as a "new economic model" for Turkey but he focused on macro-economic issues and steered well clear of tackling the currency crisis. His comments did nothing to shore up the lira currency.

The ripple effects of Turkey's spiraling currency crisis was felt globally as the Dow Jones Industrial Average and the S&P 500 fell 0.8% and 0.5%, respectively, following Trump's tweet. This week alone, it has lost about 15 percent.

"In that sense, the Turkey situation can be a contagion not only in Europe but across emerging markets", Anderson said.

"Turkey is playing a very risky game". And swift currency swings or securities-market routs can catch banks' traders off guard, saddling them with losses while trying to facilitate client transactions.

Markets are deeply concerned over the direction of domestic economic policy under Erdogan with inflation at almost 16 per cent but the central bank reluctant to raise rates in response. Unlike many other news organizations, we have not put up a paywall. High level meetings in Washington between US and Turkish officials ended this week without an apparent resolution.

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