Editor in Chief: Moh. Reza Huwaida Tuesday, September 25th, 2018

Turkey Lira Crashes as Trump Piles on Pressure

Turkey Lira Crashes as Trump Piles on Pressure

ISTANBUL - The embattled Turkish lira tumbled over 16 percent to new record lows against the dollar as strains with the United States intensified, but President Recep Tayyip Erdogan defiantly proclaimed Turkey would emerge victorious in an “economic war”.
Compounding the lira’s agony, President Donald Trump said Friday he had doubled steel and aluminium tariffs on Turkey, noting that relations between the NATO allies were “not very good”.
The lira’s plunge on Friday 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 economy to near meltdown.
“The plunge in the lira which began in May now looks certain to push the Turkish economy into recession and it may well trigger a banking crisis,” said Andrew Kenningham, chief global economist at Capital Economics. The currency turbulence coincides with the most bitter dispute with the United States 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 Turkey. The lira was trading at 6.47 to the dollar at 1900 GMT, a loss on the day of 16.6 percent. Earlier it had fallen as much as 22 percent. “The last time I can remember a currency exploding into a similar acceleration of weakness to what we have seen in the past 24 hours is the Russian ruble crisis that transpired late in 2014,” said Jameel Ahmad, head of currency strategy at FXTM.
The tumult also affected Wall Street, which finished the week on a sour note, with the Dow Jones, S&P 500 and Nasdaq all finishing down on Friday.
But Erdogan, who had remained unusually silent until now as the lira crisis mounted, urged Turks to take matters into their own hands. (AFP)