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Erdogan tells Turks to buy plunging lira

International Business
Sat, 11 Aug 2018
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ANKARA: President Recep Tayyip Erdogan told Turks yesterday to exchange their gold and dollars into lira, with the currency in free fall as US President Donald Trump escalated a feud with Ankara by doubling tariffs on metals imports.

The lira has long been falling on worries about Erdogan’s influence over monetary policy and worsening relations with the US. That turned into a rout yesterday, with the lira diving as much as 18 per cent at one point, the biggest one-day drop since Turkey’s 2001 financial crisis.

The lira, which has lost more than 40pc this year, hit a new record low after Trump took steps to punish Ankara in a wide-ranging dispute. He said he had authorised higher tariffs on imports from the US’ Nato ally, imposing duties of 20pc on aluminium and 50pc on steel. The lira, he noted on Twitter, “slides rapidly downward against our very strong Dollar!”

“Our relations with Turkey are not good at this time!” he said in an early morning post.

Turkey’s trade ministry said the US tariff moves were against World Trade Organisation rules.

Without naming countries, Erdogan said supporters of a failed military coup two years ago, which Ankara says was organised 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 new duties on Turkey are double the level that Trump imposed in March on steel and aluminium imports from a range of countries. The White House said he had authorised them under Section 232 of US trade law, which allows for tariffs on national security grounds.

While Turkey and the US are at odds over a host of issues, the most pressing disagreement has been over the detention of US citizens in Turkey, notably Christian pastor Andrew Brunson who is on trial on terrorism charges. Turkish officials held talks in Washington this week but there was no breakthrough.

The lira sell-off has deepened concern over whether over-indebted Turkish companies will be able to pay back loans taken out in euros and dollars after years of overseas borrowing to fund a construction boom under Erdogan.

His characteristic defiance has further unnerved investors. The president, who says a shadowy “interest rate lobby” and Western credit ratings agencies are attempting to bring down Turkey’s economy, appealed to his countrymen’s patriotism.

“If there is anyone who has dollars or gold under their pillows, they should go exchange it for liras at our banks. This is a national, domestic battle,” he told a crowd in the northeastern city of Bayburt.