This article is from the source 'guardian' and was first published or seen on . It last changed over 40 days ago and won't be checked again for changes.

You can find the current article at its original source at https://www.theguardian.com/business/2018/aug/15/turkish-lira-rallies-as-ankara-increases-tariffs-on-us-imports

The article has changed 5 times. There is an RSS feed of changes available.

Version 0 Version 1
Turkish lira rallies as Ankara increases tariffs on US imports Turkish lira rallies as Ankara increases tariffs on US imports
(35 minutes later)
The lira continued its recovery against the dollar on Wednesday as Turkey increased tariffs on US goods and introduced measures to restrict bets against the embattled currency. The lira has continued its recovery against the dollar on Wednesday as Turkey increased tariffs on US goods and introduced measures to restrict bets against the embattled currency.
After rising as high as 5.9 to the dollar, the lira was up 3.8% to $6.16 shortly after 1pm. The currency’s climb followed retaliatory tariffs by Ankara against US goods including rice, coal and cars. The tariff increases followed Donald Trump’s decision last week to double US tariffs on Turkish steel and aluminium, deepening Turkey’s economic crisis. After rising as high as 5.9 to the dollar, the lira was up 3.8% to $6.16 shortly after 1pm on Wednesday. The currency’s climb followed retaliatory tariffs by Ankara against US goods including rice, coal and cars. The tariff increases followed Donald Trump’s decision last week to double US tariffs on Turkish steel and aluminium, deepening Turkey’s economic crisis.
Turkey’s trade minister, Ruhsar Pekcan, said: “The United States is an important trading partner but it is not our only partner. We have other partners and alternative markets.”Turkey’s trade minister, Ruhsar Pekcan, said: “The United States is an important trading partner but it is not our only partner. We have other partners and alternative markets.”
In an effort to defend the lira, Turkey’s central bank tightened its rules on currency swaps and other foreign exchange transactions, limiting banks’ ability to supply lira to foreign financial companies. In an effort to defend the lira, Turkey’s central bank tightened its rules on currency swaps and other foreign exchange transactions, limiting the ability of banks to supply lira to foreign financial companies.
Peter O’Flanagan, the head of trading at the foreign exchange consultancy Clear Treasury, said: “Restrictions from the Turkish central bank limiting banks’ use of swap lines has had the desired effect on the lira.”Peter O’Flanagan, the head of trading at the foreign exchange consultancy Clear Treasury, said: “Restrictions from the Turkish central bank limiting banks’ use of swap lines has had the desired effect on the lira.”
Turkey sought to face down the US and currency traders as its president, Recep Tayyip Erdoğan, reportedly received support from the German chancellor, Angela Merkel. In a phone conversation the leaders agreed to strengthen bilateral ties and Merkel told Erdoğan the strength of Turkey’s economy was important to Germany, a presidential source told Reuters.Turkey sought to face down the US and currency traders as its president, Recep Tayyip Erdoğan, reportedly received support from the German chancellor, Angela Merkel. In a phone conversation the leaders agreed to strengthen bilateral ties and Merkel told Erdoğan the strength of Turkey’s economy was important to Germany, a presidential source told Reuters.
In another episode of diplomatic activity, Erdoğan also met the Emir of Qatar, Sheikh Tamim bin Hamad al-Thani, who was on a “working visit” to meet the Turkish president. In another episode of diplomatic activity, Erdoğan met the Emir of Qatar, Sheikh Tamim bin Hamad al-Thani, who was on a “working visit” to meet the Turkish president.
Erdoğan has accused the US of waging economic war against his country and has vowed not to back down. Ankara more than doubled the tariff on US rice to 50%, increased the US coal tariff to 14% from 10% and more than tripled the tariff on cars to 120%.Erdoğan has accused the US of waging economic war against his country and has vowed not to back down. Ankara more than doubled the tariff on US rice to 50%, increased the US coal tariff to 14% from 10% and more than tripled the tariff on cars to 120%.
Erdoğan and Trump are locked in a dispute about the US pastor Andrew Brunson, who was arrested almost two years ago and accused of plotting against the Turkish government. On Wednesday a Turkish court rejected an appeal for Brunson to be released from house arrest and for his travel ban to be lifted but an upper court is yet to rule on the appeal.Erdoğan and Trump are locked in a dispute about the US pastor Andrew Brunson, who was arrested almost two years ago and accused of plotting against the Turkish government. On Wednesday a Turkish court rejected an appeal for Brunson to be released from house arrest and for his travel ban to be lifted but an upper court is yet to rule on the appeal.
Some analysts have predicted economic turmoil in Turkey for many months as inflation soared and the lira fell. Like other emerging markets, Turkish companies borrowed heavily in dollars when US interest rates were low, fuelling a consumer boom that is running out as the dollar strengthens.Some analysts have predicted economic turmoil in Turkey for many months as inflation soared and the lira fell. Like other emerging markets, Turkish companies borrowed heavily in dollars when US interest rates were low, fuelling a consumer boom that is running out as the dollar strengthens.
Jürgen Odenius, an economic counsellor at PGIM Fixed Income, said: “The root cause of the crisis lies in a leverage-financed domestic demand boom that increased the external financing requirement of Turkey’s corporations, banks, and government … As the lira collapses, this lending boom now is undoubtedly grinding to a sudden halt.”Jürgen Odenius, an economic counsellor at PGIM Fixed Income, said: “The root cause of the crisis lies in a leverage-financed domestic demand boom that increased the external financing requirement of Turkey’s corporations, banks, and government … As the lira collapses, this lending boom now is undoubtedly grinding to a sudden halt.”
Continuing fears about Turkey helped drag down other stock markets. The FTSE 100 index fell 1.1% to 7524.66, led by mining groups Anglo American, Fresnillo, Antofagasta and BHP Billiton. The falling price of copper combined with general unease about risky assets sent the miners down. Germany’s Dax index also fell 1.1% while the French CAC 40 index dropped 1.2%. US futures were also down before trading started on Wall Street. European banking shares were down 1% as fears lingered over the crisis hitting lenders with exposure to Turkey. Continuing fears about Turkey helped drag down other stock markets. The FTSE 100 index fell 1.1% to 7524.66, led by the mining groups Anglo American, Fresnillo, Antofagasta and BHP Billiton. The falling price of copper combined with general unease about risky assets sent the miners down. Germany’s Dax index also fell 1.1% while the French CAC 40 index dropped 1.2%. US futures were also down before trading started on Wall Street. European banking shares were down 1% as fears lingered over the crisis hitting lenders with exposure to Turkey.
Ken Odeluga, a market analyst at City Index, a spread betting firm, blamed worries over the Turkish crisis for the stock market falls. “Turkey is nowhere near fixed, so risk appetite is struggling to make a comeback,” he said. Ken Odeluga, a market analyst at the spread-betting company City Index, blamed worries over the Turkish crisis for the stock market falls. “Turkey is nowhere near fixed, so risk appetite is struggling to make a comeback,” he said.
Stock marketsStock markets
Recep Tayyip ErdoğanRecep Tayyip Erdoğan
TurkeyTurkey
US foreign policyUS foreign policy
Trump administrationTrump administration
Donald Trump
newsnews
Share on FacebookShare on Facebook
Share on TwitterShare on Twitter
Share via EmailShare via Email
Share on LinkedInShare on LinkedIn
Share on PinterestShare on Pinterest
Share on Google+Share on Google+
Share on WhatsAppShare on WhatsApp
Share on MessengerShare on Messenger
Reuse this contentReuse this content