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Turkey lira crashes as Trump piles on pressure

AFP  |  Istanbul 

The embattled tumbled over 16 per cent to new record lows against the dollar today as strains with the intensified, but defiantly proclaimed would emerge victorious in an "economic war".

Compounding the lira's agony, said he had doubled and aluminium tariffs on Turkey, noting that relations between the NATO allies were "not very good".

The lira's plunge is one of the most serious economic crises that Erdogan has faced since coming to power in 2003 in the wake of a financial crisis in 2001 that brought the to near meltdown.

The currency turbulence coincides with the most bitter dispute with the since the 1974 Turkish invasion of Cyprus, which so far shows no sign of abating.

Fears over contagion even pushed global equity markets lower, with some European banks coming under heavy selling pressure due to their exposure to

The was trading at 6.4 to the dollar at 1600 GMT, a loss on the day of 16.4 per cent. Earlier it had fallen as much as 22 per cent.

"The is in a state of crisis, as a result of investor confidence in Turkish assets remaining at alarmingly low levels," said Jameel Ahmad, of Currency Strategy & Market Research at FXTM.

But Erdogan, who had remained unusually silent until now as the lira crisis mounted, urged Turks to take matters into their own hands. "If you have dollars, euros or gold under your pillow, go to banks to exchange them for It is a national fight," he said.

"This will be the response to those who have declared an economic war," he said, blaming Turkey's woes on what he described as an "interest rate lobby" seeking to push the country to higher rates.

Erdogan had raised eyebrows yesterday when he appeared to invoke divine intervention, saying: "If they have dollars, we have our people, we have our right and we have Allah!" remains at loggerheads with the over the detention for the last two years of American pastor and a host of other issues.

Trump intensified the alarm on financial markets with a new tweet on the Turkey row.

"I have just authorized a doubling of Tariffs on and Aluminum with respect to Turkey as their currency, the Turkish Lira, slides rapidly downward against our very strong Dollar!" Trump said on

"Our relations with Turkey are not good at this time!" But Erdogan said Turks should not be alarmed by exchange rate movements. "The dollar, the mollar, will not cut our path," said Erdogan, adding Turkey had alternatives "from Iran, to Russia, to and some European countries".

Erdogan also today held with Russian Vladimir Putin, discussing economic and trade issues as well as the crisis, the Turkish presidency said.

(This story has not been edited by Business Standard staff and is auto-generated from a syndicated feed.)

First Published: Fri, August 10 2018. 22:50 IST