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

Turkey to retaliate against Trump's metal tariffs

Turkey to retaliate against Trump's metal tariffs

It hit a new record low after Trump announced he would punish Ankara in a wide-ranging dispute.

U.S. President Donald Trump said he's authorized doubling some metals tariffs on Turkey, citing poor relations with the North Atlantic Treaty Organisation ally amid an escalating conflict over its detention of an American pastor.

President Trump's announcement Friday morning that he has authorized the doubling of tariffs on steel and aluminum imports coming from Turkey came in a tweet that noted, "Our relations with Turkey are not good at this time!"

Trump last month threatened to slap "large sanctions" on Turkey if it did not release American pastor Andrew Brunson, who faces charges of espionage for allegedly supporting a failed coup attempt in 2016. Trump wrote. "Aluminum will now be 20% and Steel 50%".

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.

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.

The Turkish lira fell against the USA dollar due to mounting tensions between Turkey and the U.S. in the wake of Ankara's refusal to release American pastor Andrew Brunson who is suspected of being involved with a terrorist group.

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

"In this process, we will finely work every single detail as a wide spectrum including all national and worldwide stakeholders", he said in the first part of his speech, referring to Turkey's Medium-Term Economic Plan (OVP), which will soon be renamed.

The lira, which has lost a third of its value this year, fell on his comments and was trading at around 6.05 to the dollar after he spoke, almost 9 percent weaker on the day.


Speaking to supporters in the Black Sea province of Rize late on Thursday, Erdogan brushed off concerns over the currency as campaigns against Turkey. "Don't worry", Erdogan told a crowd in the northeastern city of Bayburt.

Turkey is world's sixth-biggest steel producer, and eighth largest steel importer for the USA according to the International Trade Administration.

The lira hit a record low of 6.24 per dollar on Friday, before recovering to 5.92 - still down a whopping 7 per cent on the day.

"Officials are reportedly preparing stimulus measures in a bid to prop up growth, but these would simply exacerbate Turkey's economic vulnerabilities and could ultimately tip the country into a full-blown crisis, " Capital Economics said in a commentary.

Independent analysts argue the central bank should instead raise rates to tame inflation and support the currency. That caused a further drop in the lira. But since adopting increased powers, Mr Erdogan appears to have greater control over the bank as well. "This is a domestic and national struggle", Erdogan said according to CNBC.

Russia struck back Friday, with Prime Minister Dmitry Medvedev saying that any move to rein in Russian banks or their foreign-currency dealings would be "economic war".

As you can imagine, more people are reading The Jerusalem Post than ever before.

With central banks holding down interest rates, currency traders are the new economic enforcers, as Friday's volatile markets showed. President Erdogan has pressured the central bank to maintain low interest rates by refraining from implementing much-needed hikes.

The MSCI All-Country World index, which tracks shares in 47 countries, was down 0.6 percent on the day, having erased all its gains for the week.

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