Turkey lira crashes as Donald Trump piles on pressure

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US President Donald Trump is doubling tariffs imposed on Turkish steel and aluminum, insisting that the relationship between the two countries is 'not good'.

The President had tweeted at Turkey's Islamist President Recep Tayyip Erdoğan last month to free Pastor Brunson, writing: "He has been held hostage far too long".

"In this process, we will finely work every single detail as a wide spectrum including all national and worldwide stakeholders", he said in the first part of his speech, referring to Turkey's Medium-Term Economic Plan (OVP), which will soon be renamed.

After inconclusive talks this week on solving the spat, Trump took advantage of Turkey's turmoil on Friday to turn the screws on the country. The first one was Erdogan gave a speech doubling down on his failed policies, saying once again all their problems were the result of an "economic war" being waged against Turkey.

"Those who have dollars, euros or gold under their pillows should go and exchange them into [Turkish] lira".

Erdogan has appealed to the people to convert their dollars to liras, saying Turkey is in the midst of an "economic war" with the West.

Ankara is under pressure to adopt orthodox steps to protect the lira by aggressively increasing interest rates to rein in double-digit inflation, a move Erdogan has publicly opposed.

Erdogan has described the Turkish economy as "under attack".

Turkish newspaper Hurriyet and other media reports quote Erdogan as making the comment to a group of worshippers following traditional Muslim Friday prayers during a visit to the northern city of Bayburt. The lira, which had already lost one-third of its value this year largely over worries about Erdoğan's wider control of the economy, is at a fresh record low, at one point losing 18%, its biggest fall since 2001.

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New Finance Minister Berat Albayrak - Erdogan's son-in-law - acknowledged that the central bank's independence was critical for the economy, promising stronger budget discipline and a priority on structural reforms.

In a separate opinion piece in the pro-government newspaper Daily Sabah, Erdogan's spokesman Ibrahim Kalin said Turkey's efforts to solve the crisis with diplomatic methods had been dismissed by the Trump administration, warning that "the US runs the risk of losing Turkey" as an ally.

"We doubt Turkey is ready to limit its fiscal flexibility right now". Turkey retaliated with Erdogan ordering authorities to freeze the assets of the USA justice and interior ministers in Turkey - "if there are any". The U.S. exported $9.75 billion worth of goods-mostly cotton, scrap iron, steel, civilian aircraft parts, coal, and petroleum gases-to Turkey, and imported $9.42 billion worth of goods from them.

Relations between the USA and Turkey have not been helped by Turkey jailing an American citizen for an alleged attempted coup in 2016.

The White House followed through on that threat on August 1 and sanctioned two top Turkish officials linked to Brunson's ordeal. Trump said in an early morning post on Twitter.

Independent analysts argue the central bank should instead raise rates to tame inflation and support the currency.

In Rize, Erdogan said the United States would pay a price by challenging Turkey for the sake of "petty calculations", denouncing Washington for declaring "economic war on the entire world" and holding countries "for ransom through sanction threats".

He said disagreements had occurred between the two countries in recent years and Turkey' s efforts to reverse the "dangerous trend" were in vain. But the immediate trigger is North Carolina pastor Andrew Brunson, who has been detained in Turkey's Aegean province of Izmir since October 2016 on thinly supported espionage and terror charges.

Trump decided in March to impose import duties of 25 percent on steel and 10 percent on aluminum imports from several countries, including Turkey.

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