Turkey shaken by financial fears, Trump rattles it further

Turkish US talks end at State Department

President Donald Trump said on Friday he had authorized higher tariffs on imports from Turkey, imposing a 20 percent duty on aluminum and 50 percent one on steel, as tensions mount between the two North Atlantic Treaty Organisation allies over Ankara's detention of an evangelical pastor and other diplomatic issues.

The sudden drop came when Donald Trump announced on Twitter he was doubling U.S. import tariffs on Turkish steel and aluminium.

Turkey's iron, steel and aluminum exports to the US were $1.1 billion in 2017 - 0.7 percent of the total exports.

U.S. sanctions and president Erdogan's tightening control over monetary policy are driving the fall, which sent the lira to an all-time low of above 6 to the dollar this morning.

Turkey remains at loggerheads with the United States over the detention for the last two years of American pastor Andrew Brunson and a host of other issues.

At 8.47 a.m. Eastern time - 3:47 p.m.in Turkey - Trump had turned to Twitter to announce that he would be doubling steel and aluminum sanctions on Turkey.

Severe economic and geopolitical troubles that have continued to plague Turkey combined on Friday to cause the exceptionally sharp currency moves.

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President Erdogan tried to stem currency losses on Friday by urging Turkish citizens to fight the economic war against other countries and use foreign currencies and gold to buy lira.

Still, analysts said the lira's plunge which took it down almost 20 percent against the dollar on the day in the European afternoon, was dramatic, with analysts trying to recall when they last saw anything like it. We are working hard. Prices are already up 16 percent since previous year and this week's drop will make that worse. The S&P 500 lost 20.3 points, or 0.71 percent, to 2,833.28 and the Nasdaq Composite dropped 52.67 points, or 0.67 percent, to 7,839.11.

Treasury and Finance Minister Berat Albayrak - who is Erdogan's son-in-law - was scheduled later on Friday to outline a 'new economic model'.

Erdogan, a self-described "enemy of interest rates", wants cheap credit to fuel growth, but investors fear the economy is overheating. The price of the lira dropped significantly immediately after he spoke. They include BBVA, UniCredit, and BNP Paribas, and the exposure to those lenders is being closely watched, the Financial Times reported.

Speaking to Middle East Eye this week, small shopowners in Turkey said the dramatic fall in the lira had had devastating consequences for their businesses.

But neither should global investors over-react, suggested Kenningham, noting that Turkey accounts for just one percent of the world economy, slightly less than the Netherlands, making it not much of a risk to the world economy, or even the eurozone. "I used to sell 100kg of meat, but eventually I started to sell 10kg in the same period of time", he said. "You do the math". Overnight it had retreated to its lowest since November 2016 on threats of new USA sanctions, weakening beyond the psychologically important 65-per-dollar threshold.

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