Published: Sun, August 12, 2018
Global | By Shelia Dennis

Turkish Economic Crisis Deepens As Currency Hits All-Time Low

Turkish Economic Crisis Deepens As Currency Hits All-Time Low

Turkish President Recep Tayyip Erdogan has accused the USA of trying to "bring Turkey to its knees through threats over a pastor".

Reminding the world of the time when Turkey rushed to America's help whenever necessary, during the past six decades, Erdogan recounted Turkish contribution in defusing the Korean and Cuba missile crises, and sending troops to Afghanistan in the wake of the September 11 terror attacks.

On Friday, Turkey's currency, the Lira, fell as much as 14%, causing the global financial markets to shudder.

Reverberations spread through global markets, with European stock markets especially hit as investors took fright over banks' exposure to Turkey.

Canada's main stock index also fell on Friday.

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The Turkish lira dropped dramatically against the dollar Friday, losing more than 18 percent of its value in one day - worsening an already months-long decline for Turkey's currency.

It hit arecord low after Trump announced he had authorised higher tariffs on imports from Turkey, imposing duties of 20 percent on aluminum and 50 percent on steel. At the same time, the US froze the sale of 100 F-35s to Turkey, despite their co-operation for their manufacturing and production since 2008.

But Erdogan vowed there would be no easing of the law in Brunson's case, saying: "We have not made concessions on justice so far, and we will never make any".

"Aluminum will now be 20% and Steel 50%", President Trump wrote. He threatened the U.S. with an "Ottoman slap" if they continue to stand in the way of the Turkish incursion into northwest Syria.

But analysts say that while there may be losses at some banks, Turkey's economic problems do not pose a big threat to Europe or other big economies like the United States.

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"I'm not aware of any prior administration using tariffs in this way, and there's a very simple reason: because they're an incredibly blunt instrument that often can have blowback on American workers and consumers as we've seen in the China context", said Ned Price, a former Central Intelligence Agency officer who also served as a National Security Council spokesman during the Obama administration. It followed a deepening rift with the United States, worries about its own economy and lack of action from policymakers.

President Erdogan urged his people in a counter-tweet: "Change the euros, the dollars and the gold that you are keeping beneath your pillows into lira at our banks".

Without naming any country, Erdogan said that those - who stand against Turkey for the sake of small calculations - would pay the price.

"We will not lose the economic war", state-run TRT Haber TV quoted Erdogan as saying, according to Agence France-Presse.

Turkey and the US are now experiencing rocky relations following Washington's imposition of sanctions on Interior Minister Suleyman Soylu and Justice Minister Abdulhamit Gul for not releasing American Pastor Andrew Brunson, who faces terrorism charges in Turkey. Gulen denies the allegation. -Turkish relations, on account of the States' demand for the release of Pastor Andrew Brunson from Turkish prisons where he has been detained since October 2016 and now is under home arrest. Henri Barkey, a professor of International Relations at Lehigh University, the tariffs "an unnecessary escalation" and advised direct talks between Mr Trump and Mr Erdogan.

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