Economic turmoil hits Turkey, US bank stocks react

Lloyd Doyle
August 11, 2018

Turkey's economic woes worsened after US President Donald Trump escalated a feud with Turkey by doubling tariffs on metals imports. Trump wrote on Twitter.

'Aluminum will now be 20 percent and Steel 50 percent.

Since then, its relationship with Turkey, the sixth largest steel importer to the United States, has deteriorated, prompting Ankara to send a delegation this week to Washington to meet with both the State and Treasury Departments.

The news comes as tensions between the USA and Turkey continue to grow over the North Atlantic Treaty Organisation ally's continued detainment of Pastor Andrew Brunson.

President Donald Trump's decision to double USA tariffs on steel and aluminum imports from Turkey is "brutal", director of the European Council on Foreign Relations said. The lira slid to a fresh record low against the USA dollar. The ruble has lost 17% of its value against the dollar this year.

Well, if you want azure seas, ancient temples and a holiday which most likely costs less than it did previous year, then yes.

European shares fell on Friday as a dramatic fall in the Turkish lira jolted markets, with banks such as Spain's BBVA and Italy's UniCredit hit by worries over their exposure to Turkey.

In what appears to be a diplomatic riposte, Turkey later said Erdogan had held a phone call with Russian President Vladimir Putin to discuss economic ties.

President Trump's discarding of the Iran nuclear deal is a point of contention, as well, as almost half of Turkey's oil imports come from Iran, meaning new sanctions against Iran come back and hurt the Turkish economy as well.


Erdogan's characteristic defiance in the face of the crisis has further unnerved investors.

Erdogan has been putting pressure on the central bank not to raise interest rates in an attempt to help borrowers.

The trouble is that for all of Albayrak's talk of Central Bank independence, Erdogan is fiercely opposed to any interest rate hikes, which are widely seen as necessary to stem the bleeding.

The dollar rose as exposure to Turkey could impact European banks and spark a domino effect as people begin to pull out of those banks and into US assets, said Gregan Anderson, macroeconomic strategist at brokerage Bulltick LLC.

A favourable exchange rate though can't have harmed the situation: on Friday, the USA dollar would buy nearly six Turkish lira; at the end of January, it would have got you less than four.

The currency drop is particularly painful for Turkey because the country finances a lot of its economic growth with foreign money.

He declared: "Our relations with Turkey are not good at this time!" "It just shows the importance of the evangelical vote in the U.S.as it heads to midterms". "But if the United States can't handle relations with Turkey ... then a further deepening of relations with Moscow is an option".

Turkey has accused Andrew Craig Brunson of spying and "committing crimes on behalf of terror groups without being a member".

While Turkey and the United States are at odds over a host of issues, the most pressing disagreement has been over the detention of USA citizens in Turkey, notably Christian pastor Andrew Brunson who is on trial on terrorism charges. And of course, Brunson and the other detainees, including local staff of the U.S. diplomatic mission and various persons thought in some cases to be Gulenist Turkish-Americans, would have to be released.

Other reports by Iphone Fresh

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