Turkey's Erdogan calls on Turks to buy lira for 'national battle'

Kenny Grant
August 11, 2018

The lira plunged as much as 14 per cent on Friday, as worries about Erdogan's influence over monetary policy and worsening USA relations snowballed into a market panic. Germany's DAX index slid 2 percent.

Trump's tweet sent the already-depreciating Turkish lira into free fall, and appeared to bring other developing market currencies - and the euro - down with it.

Turkey is world's sixth-biggest steel producer, and eighth largest steel importer for the United States according to the International Trade Administration.

President Tayyip Erdogan told Turks on Friday to exchange gold and dollars into lira as the country's currency plunged as much as 14 percent on worries about his influence over monetary policy and worsening relations with the United States.

Turkey remains at loggerheads with the United States over the detention for the last two years of American pastor Andrew Brunson and a host of other issues. "Look at what we were 16 years ago and look at us now", Erdogan told supporters.

Image: Donald Trump claimed 'relations with Turkey are not good at this time!' The country is not a member of the European Union but is economically linked to it.

On Friday, President Trump announced that he will double America's metal tariffs on Turkey - despite the fact that he has no good reason for doing so.

The turmoil makes it hard for global investors to justify remaining in Europe and it is also negative for emerging markets. Erdogan has been putting pressure on the central bank to not raise interest rates in order to keep fueling economic growth.

Severe economic and geopolitical troubles that have continued to plague Turkey combined on Friday to cause the exceptionally sharp currency moves.

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The currency has lost almost a third of its value this week.

The MSCI All-Country World index, which tracks shares in 47 countries, was down 0.6 percent on the day, having erased all its gains for the week.

Turkey's turmoil hit Wall Street as the Dow Jones Industrial Average fell more than 200 points today.

U.S. President Donald Trump waves after exiting Air Force One to board Marine One after returning from OH on his way to Bedminster, NJ, at the Morristown Airport in Morristown, NJ, U.S., August 4, 2018.

The safe-haven Japanese yen hit a one-month high of 113.38 against the dollar. The Turkish currency shed about 17% of its value in a single day.

Key European equity markets shed up to two percent, while Wall Street was down 0.7 percent after the opening bell in NY.

Adding to emerging market currency woes was the Russian rouble, weakened to 67.12 to the dollar. "It could serve as a template for further tariff actions against China if the renminbi depreciates further relative to the dollar, even if that depreciation were mainly a reflection of the relative strength of the USA and Chinese economies".

Relations are also tense because of new U.S.

In commodities, USA crude oil fell 0.5 percent to US$66.51 a barrel, while Brent crude was 0.4 percent lower at US$71.77 per barrel. USA light crude settled 82 cents higher at $67.33 a barrel.

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