Monday, 24 September, 2018

Turkey doubles tariffs on some USA imports; lira rallies

Energy and industrial companies took some of the worst losses while technology companies held up better MARK LENNIHAN AP Energy and industrial companies took some of the worst losses while technology companies held up better
| 15 August, 2018, 20:59

Among the products are cars, rice, some alcohol and tobacco products and some cosmetic products like sun creams.

Vice President Fuat Oktay wrote on Twitter that the increase in duties were in response to "deliberate attacks on our economy" by the United States administration.

The Turkish lira has dropped to record lows in recent weeks, having fallen some 42 percent so far this year.

The Turkish lira was trading sharply lower yesterday even after the country's central bank announced measures to shore up the financial system amid warnings of a deepening crisis.

Despite a call from Turkish business groups for President Recep Tayyip Erdogan to mend ties with Washington, the leader was defiant on Tuesday, calling for a boycott of USA electronic equipment.

The Turkish currency nosedived in value over concerns about Erdogan's economic policies and after the United States slapped sanctions on Turkey angered by the continued detention of an American pastor.

Ankara acted amid increased tension between the two North Atlantic Treaty Organisation allies over Turkey's detention of a pastor and other diplomatic issues, which have helped to send the lira tumbling to record lows against the dollar.

Last Friday, U.S. President Donald Trump said he had authorised higher tariffs on aluminium and steel imports from Turkey.


It's not clear how Erdogan would enforce the boycott, the AP noted. In addition, the US has placed sanctions on two Turkish ministers over the arrest of an American pastor who is charged with having links to terrorism. He renewed a call on Turkish citizens to convert their dollars into the local currency. Erdogan stressed that any product made by the U.S. could be made even better in Turkey, and that for the time being the country would pivot to using South Korea's Samsung electronics. As President Recep Tayyip Erdogan lashed out at the United States, took higher rates off the table and said he wouldn't accept an worldwide bailout, traders pushed down Turkish assets in a selloff that spilled over to other developing economies.

Turkey's economic crisis boils down to heavy reliance on foreign investments made in dollars, while Turkish assets are valued in lira, and the lira has been declining at an alarming rate (although it appeared to stabilize somewhat on Tuesday). Brunson was detained in connection with the failed military coup to oust the country's president in 2016, which Ankara blames on religious leader Fethullah Gulen, who is living in self-imposed exile in the US.

However, severe changes in the value of the currency calmed Tuesday after news that USA national security adviser John Bolton had met with the Turkish ambassador to Washington Monday.

In a statement released Tuesday, Turkish business groups called on Erdogan to let the Turkish central bank raise interest rates to stop the currency crisis. Additional tariffs on USA products amounted to $553 million, Trade Minister Ruhsar Pekcan said Wednesday.

Poor relations between Washington and Ankara have added to Turkey's economic woes, but given broader fundamentals it is only a proximate cause of the market mayhem.

Hurriyet newspaper said the court in Izmir rejected the appeal, but that a higher court would review the appeal.

Meanwhile, Turkey has also decided reject a US appeal calling for the release of an imprisoned American pastor.

The appeal document seen by Reuters said the court should halt any unlawful political interventions and lift judicial control provisions imposed on Andrew Brunson.

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