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

Share

He repeated a long-standing plan to shift to trading in national currencies and said Turkey was preparing for such a step with Russia, China and Ukraine.

The United States is the biggest destination for Turkish steel exports.

U.S. President Donald Trump said Friday he had authorized the doubling of steel and aluminum tariffs with respect to Turkey, as tensions mount between the two North Atlantic Treaty Organisation allies.

There are now fears the weakening lira will see Turkish companies that borrowed heavily in the country's construction boom struggle to repay loans in dollars and euros.

In an opinion piece in the New York Times on Friday, Erdogan said Turkey's partnership with the United States could be in jeopardy unless Washington "starts respecting Turkey's sovereignty".

The United States placed sanctions on two Turkish officials earlier this month because of Brunson's case.

A Turkish delegation visited Washington for talks this week but left with no signs of a breakthrough.

Reverberations spread through global markets, with European stock markets especially hit as investors took fright over banks' exposure to Turkey.

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. Trump said on Twitter.

Erdogan has downplayed the currency crisis, urging Turks to convert any stashed-away gold or foreign currency into lira, thereby waging a "war of independence" against America.

Also on Friday, relations between the United States and Turkey have worsened over the fundamentalist Muslim-majority country's detention of American pastor Andrew Brunson, who was arrested by authorities during a post-military coup attempt in 2016.

"The dollar can not block our path".

Erdogan's words did little to reassure investors.

That is unlikely to mollify investors who are also anxious by the growing dispute with the United States.

The Turkish financial crisis set off a wave of selling across emerging markets, reviving the spectre of contagion that has been the sector's Achilles heel for decades.

A war of sharp words also took place in January, when Turkey launched "Operation Olive Branch" against Kurdish fighters in Afrin.

"First of all, confidence needs to be regained". In response, the currency renewed its sell-off.

The lira's relentless depreciation drives up the cost of imported goods from fuel to food for ordinary Turks. There would be a transformation in the finance ministry with regards to taxation, he said.

The situation was compounded on Friday when US President Donald Trump tweeted that he had authorised a doubling of tariffs on steel and aluminium.

The country's president told a crowd of supporters in a Turkish town on the Black Sea coast: "You can never bring this nation in line with the language of threats".

And it remains unclear if the bank would be willing to sharply lift rates, with analysts saying the nominally independent institution is under the influence of Erdogan, who wants low rates to keep growth humming.

Share