Turkish lira slumps to new record low as Donald Trump doubles tariffs

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Turkey's woes shook world markets, pushing down stock indexes and lifting the dollar, which traders around the world typically buy in times of concern.

The sudden drop came when Donald Trump announced on Twitter he was doubling USA import tariffs on Turkish steel and aluminium. Trump said in an early Friday morning post on Twitter.

Putting a 50 percent tariff on a foreign country's steel exports isn't the most conventional way to secure an imprisoned American's relief.

"Our relations with Turkey are not good at this time!" he added.

A widening rift with the United States, its main North Atlantic Treaty Organisation ally, and President Tayyip Erdogan's grip on monetary policy under a new powerful executive presidency have helped to drive the lira down by more than 40 percent this year, a particular vulnerability for Turkish banks as over a third of their lending is in foreign currencies.

A "gigantic rate hike" of at least 500 basis points to calm markets and a clear commitment from the Central Bank of Turkey to support the currency could help halt the decline, Hordijk said, adding, "Another bandage to stop the lira from bleeding to death would be capital controls, but Erdogan opposes these measures".

The Turkish lira hit a record low of 6.24 per dollar on Friday, before recovering to 5.92 _ still down a whopping 7 per cent on the day.

Erdogan said that there were "various campaigns being carried out" against the country. The White House thought that Turkey had agreed to release the pastor in exchange for Israel's release of a Turkish woman that had allegedly given funding to Hamas.

Hoping to put pressure on the North Atlantic Treaty Organisation ally to free the pastor, the White House sanctioned two top Turkish government officials.

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Turkish Deputy Foreign Minister Sedat Onal (2nd-L) leaves after a meeting with U.S. Deputy Secretary of State John Sullivan at State Department in Washington, U.S., August 8, 2018, without reaching an agreement.

But President Erdogan brushed off any concerns during a speech in the northeastern city of Bayburt on Friday, saying: 'The dollar can not block our path.

US President Donald Trump says he's just authorised the doubling of steel and aluminium tariffs "with respect to Turkey".

Erdogan called on Turks to not be concerned about exchange rate movements, mockingly declaring "the dollar, the mollar will not cut our path".

"This is a national, domestic battle".

It was reported that Erdogan's son-in-law and Turkey's new finance minister, Berat Albayrak, were set to unveil a "new economic model" on Friday, but the announcement did little to reassure investors.

Brunson, an evangelical Presbyterian pastor from North Carolina, was jailed for allegedly supporting Fethullah Gulen, the US-based cleric Ankara blames for an attempted coup in 2016. 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.

Shares in France's BNP Paribas, Italy's UniCredit and Spain's BBVA, the banks seen as most exposed to Turkey, fell 4 per cent or more.

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