Er­do­gan tells Turks to buy plung­ing lira as Trump dou­bles met­als tar­iffs

The Globe and Mail Metro (Ontario Edition) - - REPORT ON BUSINESS - BEHIYE SELIN TANER I STANBUL TUVAN GUMRUKCU ANKARA

Pres­i­dent Tayyip Er­do­gan told Turks on Friday to ex­change their gold and dol­lars into lira, with the coun­try’s cur­rency in free fall af­ter U.S. Pres­i­dent Don­ald Trump turned the screws on Ankara by dou­bling tar­iffs on met­als im­ports.

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

It has also lost more than 40 per cent this year, hit­ting a new record low af­ter Mr. Trump took steps to pun­ish Turkey in a wide-rang­ing dis­pute.

Mr. Trump said he had au­tho­rized higher tar­iffs on im­ports from Turkey, im­pos­ing du­ties of 20 per cent on alu­minum and 50 per cent 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.

Those du­ties are dou­ble the level that Mr. Trump im­posed in March on steel and alu­minum im­ports from a range of coun­tries. The White House said he had au­tho­rized the move un­der Sec­tion 232 of U.S. trade law, which al­lows for tar­iffs on na­tional se­cu­rity grounds.

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

Waves from the cri­sis spread abroad, with in- vestors sell­ing off shares in Euro­pean banks with large ex­po­sure to the Turk­ish econ­omy.

The lira sell-off has deep­ened con­cern par­tic­u­larly about whether overindebted 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 Mr. Er­do­gan.

Mr. Er­do­gan’s char­ac­ter­is­tic de­fi­ance in the face of the cri­sis has fur­ther un­nerved in­vestors. The Turk­ish Pres­i­dent, who says a shad­owy “in­ter­est rate lobby” and Western credit rat­ings agen­cies are at­tempt­ing to bring down Turkey’s econ­omy, ap­pealed to Turks’ 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. “This will be my peo­ple’s re­sponse to those who have waged an eco­nomic war against us.”

Mr. Er­do­gan, elected in June to a new ex­ec­u­tive pres­i­dency, en­joys the sup­port of many Turks even though food, rent and fuel prices have all surged. “This cri­sis is cre­ated by Amer­ica,” said Serap, a 23-year-old clerk at a clothes store in cen­tral Is­tan­bul.

How­ever, the Is­tan­bul Cham­ber of In­dus­try ex­pressed its con­cern about the lira while some economists were less im­pressed by the gov­ern­ment’s han­dling of the cri­sis.

“The ba­sic rea­son the ex­change rate has gone off the rails is that con­fi­dence in the man­age­ment of the econ­omy has dis­ap­peared both do­mes­ti­cally and abroad,” said Seyfet­tin Gursel, a pro­fes­sor at Turkey’s Bahce­se­hir Univer­sity.

“Con­fi­dence needs to be re­gained. It is ob­vi­ous how it will be done: Since the fi­nal de­ci­sion­maker of all poli­cies in the new regime is the Pres­i­dent, the re­spon­si­bil­ity of re­gain­ing con­fi­dence is on his shoul­ders.”

Newspapers in English

Newspapers from Canada

© PressReader. All rights reserved.