Turkey's floundering economy exacerbated by Trump tariffs

Turkey's floundering economy exacerbated by Trump tariffs

Turkey's floundering economy exacerbated by Trump tariffs

Turkey is now under a 25 percent tariff on imported steel and 10 percent on aluminum, which went into effect in March.

The Turkish lira briefly dropped to a record low on Friday, amid concern over the economic policies of President Recep Tayyip Erdogan, as well as the diplomatic row with the U.S.

Mr Trump has castigated Turkey for detaining American pastor Andrew Brunson, who is on trial for terrorism charges for allegedly associating with plotters of the failed 2016 coup against Mr Erdogan.

Erdogan, whose typical defiance in the face of the crisis has further unnerved investors, appealed to Turks' patriotism and urged support for their free-falling currency. In the past, Trump has threatened to impose trade barriers on countries that deliberately push down the value of their currencies, so as to make their goods cheaper for American consumers (and thus, more competitive than the wares of US manufacturers). The country is not a member of the European Union but is economically linked to it.

The turmoil makes it hard for global investors to justify remaining in Europe and it is also negative for emerging markets.

Many analysts have dismissed Erdogan's complaints about a foreign-led "economic war" against Turkey, suggesting they were largely a scapegoat for the failings of the Turkish leader's own economic policies.

On Friday, they also had to also factor in Turkey's economic crisis.

The currency had earlier in the session lost almost 2 percent to R13.95, it weakest since June 28, according to Reuters data.

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. The Dow Jones Industrial average had tumbled more than 200 points by mid-morning.

Washington imposed the metals tariffs on national security grounds, claiming the glut of steel and aluminum harmed U.S. companies and the economy.

He also urged Trump to recognize the 1915 Turkish slaughter and exile of 1.5 million Armenians as a genocide, which USA presidents have declined to do for decades. The dollar index, which measures its strength against a basket of other developed-nation peers, hit its highest level since June 2017 on Friday. The currency has shed 22pc of its value since late July. It was last up 0.84 percent at 96.309. The euro dropped below 1.15 against the dollar on Friday.

"The situation of Turkey can not go on for much longer - I think they will have to intervene", Cristian Maggio, head of emerging markets strategy at TD Securities, adding that the intervention needed to be "drastic".

Global markets are in turmoil on Friday, with a historic plunge in the Turkish lira at the center of the chaos.

Oil prices rose more than 1 percent as USA sanctions against Iran looked set to tighten supply, but futures remained lower for the week as investors anxious that global trade disputes could slow economic growth and hurt demand for energy.

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