Turkey to retaliate against Trump's metal tariffs

Turkey fails to resolve disputes with US

Turkey fails to resolve disputes with US

Turkey was facing artificial financial volatility, Erdogan said, and people should not pay close attention to foreign exchange prices, and should instead focus on the "big picture". This might be the dumbest crisis ever.

On Friday, they also had to also factor in Turkey's economic crisis. It's a comedy of errors that couldn't be less amusing for the Turkish people.

The currency's drop - 40% so far this year - has become a gauge of fear over a country facing the fallout of years of debt-fuelled growth, global concern over President Recep Tayyip Erdogan's push to amass power, and a souring in relations with allies like the US.

Markets are deeply concerned over the direction of domestic economic policy under Erdogan with inflation at almost 16 percent but the central bank reluctant to raise rates in response.

He added, America's current relationship with Turkey is on a downward spiral. Why is that? Well, there are three things to understand. It followed a deepening rift with the United States, worries about its own economy and lack of action from policymakers.

That turned into a rout on Friday, with the lira diving more than 18 percent on the day and more than 40 percent this year to a new record low after Trump took steps to punish Turkey in a wide-ranging dispute.

The tweet served to place intensified pressure on the plummeting lira, despite President Erdogan's attempts to limit the damage.

And then it did on Friday.

Turkey's embattled lira on Friday hit new record lows against the U.S. dollar and euro, losing over seven percent in value as strains with the United States showed no sign of abating and fears grew over the exposure of European banks. This, of course, was nonsense.

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Turkey's currency plunged to more than six and a half lira against the dollar, a fall of about 20 percent, overnight and into Friday after a Turkish delegation returned from talks in Washington on Thursday with no apparent solutions to the row.

Still, the sell-off may not be over after the government struck a defiant tone on Friday even after Trump's move.

The currency drop will also increase the cost of living for people in Turkey by making imports more expensive.

The increase in tariffs is considered a blow to the value of Turkey's lira, which reportedly fell further after the president's announcement.

This had the opposite effect of what Trump intended.

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. The tech-heavy Nasdaq composite was down 83 points, or 1.1%, poised to end an eight-day winning streak. Since the start of the year, it is now down a full 41 percent against the dollar.

Pressure on Turkey is also coming from US Congress that moved late last month to block further F-35 deliveries to Turkey until it cancels the S-400 defence system deal with Russian Federation and Brunson is released.

It'd nearly be amusing if it were not so tragic. As the lira continues to weaken, this foreign debt becomes increasingly hard and expensive for Turkey to manage, which should further exacerbate the currency's decline.

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