Turkey currency crashes as Trump doubles metals tariffs

Turkey to reveal 'new economic model' on Friday

President Trump has authorized the doubling of steel and aluminum tariffs on Turkey amid heated tensions over detainment of an American pastor.

Trump said via a tweet that the tariff on aluminium imports will be increased to 20 per cent and the tariff on steel imports will be raised to 50 per cent as the Turkish Lira "slides rapidly downward against our very strong Dollar!"

The currency slid almost 8 percent in relation to the dollar to a record low of 6.59 shortly after Trump announced the increase on metals duties on Twitter.

Bank shares across Europe fell and the euro slipped to its lowest since July 2017 as the Financial Times quoted sources as saying the European Central Bank was concerned about European lenders' exposure to Turkey. "But if the United States can't handle relations with Turkey ... then a further deepening of relations with Moscow is an option".

On Friday, Erdogan asked Turkish citizens to sell off their gold and dollars and exchange them for the lira, in an attempt to prop up the currency.

A plummeting Turkish lira sent ripples through global equities and emerging markets on Friday, as rising fears of a wider fallout sent investors scurrying for the safety of assets such as the yen and US government bonds.

Turkish President Tayyip Erdogan told a rally Friday that his country would not yield to what he called bullying and blackmail.

The lira, which has lost a third of its value this year, fell on his comments and was trading at around 6.05 to the dollar after he spoke, almost 9 percent weaker on the day. U.S. stocks were also rattled.

The tweet is another salvo in the growing dispute between Turkey and the U.S.

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"In order to bring solutions to the existing problems, Turkey will always side with diplomacy, dialogue, good will and mutual understanding", he added. The tech-heavy Nasdaq composite was down 83 points, or 1.1%, poised to end an eight-day winning streak.

As President Erdogan continues to exert an iron grip on the government, economy, and people of Turkey, and the specter of a Turkish debt crisis continues to loom, the country's economy and currency are apt to remain under heavy pressure. That is because a trade war would make it even harder for Turkey to get the dollars it needs, so the lira would be even less valuable.

Jay Sekulow, an attorney for Trump who is also representing Brunson's family, told talk-show host and political commentator Sean Hannity's radio program on Friday: "We're close to getting a resolution in that case".

While there was no statement from the Turkish side, US State Department spokesperson Heather Nauert said wide-ranging conversations had been held.

While Turkey and the United States disagree over a host of issues, the most pressing disagreement has been over Brunson and the detention of other U.S. citizens in Turkey.

The lira fell 7% against the dollar to 5.9655 on Friday morning after hitting an all-time low earlier in the session.

The lira has lost around 20% of its value in the last 24 hours. The U.S. recently hit two high-ranking Turkish officials with sanctions after the Turkish government refused to release imprisoned Christian pastor Andrew Brunson.

Treasury and Finance Minister Berat Albayrak - who is Erdogan's son-in-law - was scheduled later on Friday to outline a "new economic model".

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