UPDATE: A statement by the Kremlin announced that Turkish President Recep Tayyip Erdoğan spoke by phone with Vladimir Putin to discuss “trade and economic cooperation.
The statement will fuel speculation that Erdoğan is moving closer to Russia as relations worsen between Turkey and the United States, even though both countries are NATO members.
The Kremlin statement said that “the state and prospects of further development of mutually beneficial trade and economic cooperation between the two countries were discussed.”
The two made a “positive assessment”, the statement added, “of the course of implementation of joint strategic projects, primarily in the energy sector.”
Turkey was thrust into a full-blown currency crisis on Friday after a defiant President Recep Tayyip Erdogan gave scant detail how he intended to shore up the lira while President Donald Trump sought to exploit Ankara’s vulnerability by hiking tariffs on its steel exports.
President Donald Trump ordered the doubling of steel and aluminium tariffs against Turkey, disturbed global markets just as much as it strained relations between the NATO allies hit a new low.
In a tweet, Mr Trump said the currency was weak against “our very strong dollar”, adding that “US relations with Turkey are not good at this time”.
I have just authorized a doubling of Tariffs on Steel and Aluminum with respect to Turkey as their currency, the Turkish Lira, slides rapidly downward against our very strong Dollar! Aluminum will now be 20% and Steel 50%. Our relations with Turkey are not good at this time!
— Donald J. Trump (@realDonaldTrump) August 10, 2018
Trump announced the decision in a Friday morning tweet following a defiantly nationalist speech Friday by Turkish President Recep Tayyip Erdogan in which he vowed that his country wouldn’t bow to “economic warfare.”
Turkish President Recep Tayyip Erdogan said in a speech that the drop was part of a “campaign” led by foreign powers. (BBC)
In a tumultuous day on the financial markets, the lira tumbled by 14.3 per cent against the dollar to TL 6.47 from the close of trading in New York. At one stage it fell as much as 18.5 per cent. (FT)
Tensions have intensified in recent weeks over Turkey’s detention of an American evangelical pastor.
Despite a meeting at the US state department this week, Ankara has failed to persuade Washington to lift its sanctions against Turkey’s interior and justice ministers, over the country’s detention of Andrew Brunson, a pastor from North Carolina.
FT reports that the lira’s drop came amid increased concerns from the eurozone’s chief financial watchdog about the exposure of some of the currency area’s biggest lenders to Turkey — chiefly BBVA, UniCredit and BNP Paribas.
The onslaught on the currency comes after years in which the economy of the strategically vital Nato state has prospered, partly because of ultra-loose monetary policy in the US and Europe, which encouraged investors to seek higher returns in Turkey and other emerging markets.
But the US and the eurozone are now reining in their monetary policy, and economists have signalled unease at an increase in Turkish companies’ debt. Many governments are alarmed at what they regard as Mr Erdogan’s increasingly arbitrary rule, while markets are nervous about his stewardship of the economy. “
We may have a few days of trouble, but they will be overcome — there is nothing they haven’t tried to bring our country to our knees,” the Turkish president told a rally in the eastern town of Bayburt. “Our responsibility is to you, not to George or Hans but to Ahmet, Mehmet and Ayse.”
He added: “Even though there is not even the slightest problem in Turkey’s macroeconomic indicators . . . we are exposed to artificial waves of financial instability.”
Turkish President Recep Tayyip Erdogan was defiant. “Don’t forget this: if they have dollars, we have our people, justice and God,” he said. “We will come out of the economic war successfully.”
The rhetoric did little to calm markets. The lira, which has dropped almost 40% against the dollar this year, resumed its slide as Erdogan spoke. (CNN)
The cost of insuring against a debt default in Turkey overtook that of Greece, which is rated four notches lower by Moody’s Investor Service. The lira had already slumped against the dollar to record lows this week, fuelled by concern about the nation’s worsening relationship with the U.S. and authorities’ ability to anchor the nation’s assets. (Bloomberg)