Economy

Turkish lira continues downward spiral, hits new record low

Turkish lira continues downward spiral, hits new record low

The main concern is that European lenders, which have been looking to emerging markets as rich sources of growth, may get squeezed by turmoil breaking out in both Turkey and Russian Federation, as the US ratchets up sanctions.

U.S. President Donald Trump ramped up his attack on Turkey by raising steel and aluminium tariffs to 50 percent and 20 percent respectively.

Trump tweeted that the latest tariff decision came as Turkey's currency, the lira, "slides rapidly downward against our very strong Dollar".

The United States is the biggest destination for Turkish steel exports with 11% of the Turkish export volume.

Bank shares across Europe fell and the euro slipped to its lowest since July 2017 as the Financial Times quoted sources as saying the European Central Bank was concerned about European lenders' exposure to Turkey.

The new duties on Turkey are double the level that Trumpimposed in March on steel and aluminum imports from a range ofcountries.

USA sanctions against top Turkish government officials and unorthodox economic policies by Turkey's President Recep Tayyip Erdogan have spooked markets.

Erdogan said during an address to supporters: "Change the euros, the dollars and the gold that you are keeping beneath your pillows into lira at our banks".

Earlier on Friday the lira plunged as much as 14 percent on as worries about Erdogan's influence over monetary policy and worsening US relations snowballed into a market panic that also hit shares of European banks.

White House says Omarosa’s claim of Trump’s racism is ‘false’
She wrote that she worked to get a copy of it and that is why she was sacked from the White House. She's criticizing the media for giving her a platform.

Erdogan on Thursday portrayed the run on his currency as a "campaign" to harm Turkey and called on people not to worry.

Tukey's Treasury and Finance Minister Berat Albayrak speaks at an event introducing the "new economic model" at the Dolmabahce Palace in Istanbul on Aug 10, 2018. Congress is pushing for a slew of separate sanctions, including halting delivery of F-35 fighter jets and blocking funding to Turkey from the World Bank and the International Monetary Fund.

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

President Trump has doubled United States tariffs on Turkish steel and aluminium, as the precipitous fall of the Turkish lira accelerates.

The Turkish lira fell around 16% against the U.S. dollar on the day, from $0.18 to $0.15 as of 3pm BST. Over the last year the Lira has lost 33% of its value and its cost of servicing its debt has risen to the highest level in 9 years.

"Don't forget, if they have their dollars, we have our people, our God", he said.

Turkish President Tayyip Erdogan has remained defiant despite the lira being in free fall. The predictable result is this has made inflation get out of control - it is up to 15.9 percent when they are supposedly trying to keep it to 5 percent - because the central bank has been so slow to raise rates, and, in fact, refused to do so at its most recent meeting. The tech-heavy Nasdaq composite was down 83 points, or 1.1%, poised to end an eight-day winning streak. Some 4 million displaced people, most them from Syria, are now living in Turkey.

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.