Trump doubled import tariffs on Turkey while the pound fell to a low; Erdogan: "God is with us"
Lira drops 18% against US dollar after US announcement of tariff increase on imports of steel and aluminum from Turkey to 50% and 20% respectively President Erdogan: Turkey will not surrender to economic mercenaries
Nimrod Halpernatali Goldsteinblumbergakonomist
10.08.2018 16:10
Save 40 Comments 133 Share on Facebook
President of Turkey Erdogan, this week in London
President of Turkey and Erdogan, this week in London Henry Nicholls / Reuters
The Turkish lira is down about 18 percent against the dollar, after the president of the United States doubled import duties on steel and aluminum from Turkey, and the Turkish president called on his countrymen to sell their dollars and pledged not to give in to "economic mercenary killers."
US President Donald Trump today announced a doubling of the rate of imports of aluminum and steel from Turkey to 20% and 50% respectively, "Our relations with Turkey are not good at the moment," Trump said in a tweet in his Twitter account.
Trump's announcement about the doubling of the tariffs came after Turkey's President Recep Tayyip Erdogan pledged "not to lose the economic war" and tried to calm his country's citizens from the drop of the local pound to its lowest level ever.
"There are a series of campaigns that are being conducted now, do not treat them," President Erdogan said on Friday. "Do not forget, if they have the dollars, we have the people, our God, we work hard, see what we were 16 years ago and see us now."
Trump Covers Turkey - Skip
Donald J. Trump
✔
@realDonaldTrump
I have just authorized a doubling of Tariffs on Steel and Aluminum with respect to Turkey as their currency, the Turkish Lira, slides rapidly down against our very strong Dollar! Aluminum will now be 20% and Steel 50%. Our relations with Turkey are not good at this time!
3:47 PM - Aug 10, 2018
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The Economist: More steps against Turkey will be a disaster for the country 09:59 This article is available to subscribers only
"We will not lose the economic war," he said after Friday prayers. "We are working hard and we will try to make our country more modern in all its districts without a vow, just know that our situation is better now than yesterday, and that tomorrow will be better than today.
Erdogan also called on Turkey's citizens to sell their dollars and gold in exchange for Turkish pounds, saying such a step would be an appropriate response to Western countries. "Turkey will not surrender to economic mercenary killers," he declared.
The Turkish lira is now plunging 17.6% against the dollar to a low of 6,487 to the dollar, its lowest level ever. Against the euro, the Turkish lira plunges 16 percent to 7,428 pounds to the euro.
The Lira's sharpest daily fall since 2001 dragged the currencies in the emerging markets to the worst day since November 2016. Argentina's dips fell more than 4% during the day, and South African currency, the Rand, fell below 14 RND for the first time since November.
Turkey also said that President Erdoğan spoke today by telephone with his Russian counterpart Vladimir Putin to discuss the economic ties between the two countries in view of the crisis in the markets.
Steel was Turkey's fourth-largest export sector last year, with exports worth $ 11.5 billion, or 7 percent of Turkey's total exports, according to the local steel exporters' association. Turkey is the sixth largest steel producer in the world.
The United States was Turkey's fourth largest trading partner last year with $ 21 billion in trade, behind Germany, China and Russia.
Fear of exposure of European banks
Earlier in the day, the Financial Times reported that the European Central Bank was concerned about the exposure to Turkey of several European banks. The newspaper noted the Spanish banks BBVA whose share plummets 5.8%, the Italian Unicredit falling 4.5%, and French BNP Paribas losing more than 4%.
According to data from the International Settlement Settlement Bank (BIS), the umbrella organization of central banks around the world, the exposure of banks in Spain to borrowers in Turkey amounts to $ 83.3 billion and the exposure of French banks to $ 38.4 billion. The exposure of Italian banks to Turkish borrowers amounts to $ 17 billion.
The exposure of British banks to Turkey amounts to 19.2 billion dollars, the exposure of banks from the United States reaches 18 billion dollars, and the exposure of Japanese banks amounts to 14 billion dollars.
Timothy Ash, senior strategist for emerging markets at Bluebay Asset Management, estimated that most of the impact of the current crisis in Turkey would be felt "probably mainly in bank exposure at this stage," CNBC reported. However, Ash added that exposure to the Turkish market is global in "Europe, the US, Japan, China, the Middle East - all of them."
At the same time, Ash estimated that there was little chance that Turkey would get into debt crisis. "I do not expect a huge global crisis, Turkey is still relatively small - at a level of $ 850 billion, and it is doubtful whether it will develop a debt crisis of countries," he added.
New sanctions on Turkey will be devastating | The Economist
Talks between the United States and Turkey are still ongoing, but many sanctions are pending, a law recently approved by the Senate threatens to prevent Erdogan's government from receiving a shipment of 100 F-35 fighter jets in response to the acquisition of a missile defense system from Russia, Will press international financial institutions such as the World Bank and the European Bank for Reconstruction and Development to pay loans to Turkey until the release of Pastor Andrew Branson and three local staff of the US Consulate, who have been held in custody for the past year.
New sanctions on Turkey, which is dependent on capital inflows, sunk into a $ 220 billion corporate debt and is now facing a continued collapse of the currency, will be devastating. Even the most symbolic measures against Turkish ministers, combined with news that the US will re-examine the lack of tax on it A $ 1.7 billion Turk has been enough to make one of the worst lows in more than a decade. On August 6, the currency recorded its sharpest daily fall against the dollar since 2001. The pound lost a third of its value in the past year. Since Erdogan was appointed prime minister in 2003, the lira has lost nearly 70 percent of its value. In general, the Turkish economy has been in trouble for some time. In light of cheap credit and fiscal spending, inflation climbed to nearly 16% last month, its highest level since 2003. The collapse of the lira forced some of Turkey's leading companies to reorganize billions of dollars in debt. Some are now on the verge of debt relief. Under pressure from Erdogan, who explained that high interest rates meant inflation, an idea that has no support among economists, and which insists on growth at all costs, the central bank did not do enough to contain the damage. To the surprise of most analysts, the bank did not raise the interest rate at its last meeting on July 24. Rising inflation may cause the pound to weaken further in order not to hurt the competitiveness of Turkish exports, said William Jackson, an analyst at Capital Economics. The bank can only hope to succeed in managing the collapse of the currency. Investor confidence is also dissipating. The end of the state of emergency on July 18 did not improve investor confidence as expected. Various emergency measures, such as the right to dismiss judges and civil servants on grounds of national security, were included in the new security law. Others were added to the constitution that tightened Erdogan's grip on the executive branch, allowing him to appoint and replace senior officials, and to weaken parliamentary oversight. After winning the last elections, it seems that Erdogan's control over fiscal and monetary policy will only increase. Erdogan abandoned his old economic team in favor of undocumented trustees, including his son-in-law, Brett Albayrak, whom he appointed as finance minister. None of these measures is expected to improve investor confidence.
https://www.themarker.com/wallstreet/1.6364451
Lira drops 18% against US dollar after US announcement of tariff increase on imports of steel and aluminum from Turkey to 50% and 20% respectively President Erdogan: Turkey will not surrender to economic mercenaries
Nimrod Halpernatali Goldsteinblumbergakonomist
10.08.2018 16:10
Save 40 Comments 133 Share on Facebook
President of Turkey Erdogan, this week in London
President of Turkey and Erdogan, this week in London Henry Nicholls / Reuters
The Turkish lira is down about 18 percent against the dollar, after the president of the United States doubled import duties on steel and aluminum from Turkey, and the Turkish president called on his countrymen to sell their dollars and pledged not to give in to "economic mercenary killers."
US President Donald Trump today announced a doubling of the rate of imports of aluminum and steel from Turkey to 20% and 50% respectively, "Our relations with Turkey are not good at the moment," Trump said in a tweet in his Twitter account.
Trump's announcement about the doubling of the tariffs came after Turkey's President Recep Tayyip Erdogan pledged "not to lose the economic war" and tried to calm his country's citizens from the drop of the local pound to its lowest level ever.
"There are a series of campaigns that are being conducted now, do not treat them," President Erdogan said on Friday. "Do not forget, if they have the dollars, we have the people, our God, we work hard, see what we were 16 years ago and see us now."
Trump Covers Turkey - Skip
Donald J. Trump
✔
@realDonaldTrump
I have just authorized a doubling of Tariffs on Steel and Aluminum with respect to Turkey as their currency, the Turkish Lira, slides rapidly down against our very strong Dollar! Aluminum will now be 20% and Steel 50%. Our relations with Turkey are not good at this time!
3:47 PM - Aug 10, 2018
48.7K
40.6K people are talking about this
Twitter Ads info and privacy
More articles on the subject
The Economist: More steps against Turkey will be a disaster for the country 09:59 This article is available to subscribers only
"We will not lose the economic war," he said after Friday prayers. "We are working hard and we will try to make our country more modern in all its districts without a vow, just know that our situation is better now than yesterday, and that tomorrow will be better than today.
Erdogan also called on Turkey's citizens to sell their dollars and gold in exchange for Turkish pounds, saying such a step would be an appropriate response to Western countries. "Turkey will not surrender to economic mercenary killers," he declared.
The Turkish lira is now plunging 17.6% against the dollar to a low of 6,487 to the dollar, its lowest level ever. Against the euro, the Turkish lira plunges 16 percent to 7,428 pounds to the euro.
The Lira's sharpest daily fall since 2001 dragged the currencies in the emerging markets to the worst day since November 2016. Argentina's dips fell more than 4% during the day, and South African currency, the Rand, fell below 14 RND for the first time since November.
Turkey also said that President Erdoğan spoke today by telephone with his Russian counterpart Vladimir Putin to discuss the economic ties between the two countries in view of the crisis in the markets.
Steel was Turkey's fourth-largest export sector last year, with exports worth $ 11.5 billion, or 7 percent of Turkey's total exports, according to the local steel exporters' association. Turkey is the sixth largest steel producer in the world.
The United States was Turkey's fourth largest trading partner last year with $ 21 billion in trade, behind Germany, China and Russia.
Fear of exposure of European banks
Earlier in the day, the Financial Times reported that the European Central Bank was concerned about the exposure to Turkey of several European banks. The newspaper noted the Spanish banks BBVA whose share plummets 5.8%, the Italian Unicredit falling 4.5%, and French BNP Paribas losing more than 4%.
According to data from the International Settlement Settlement Bank (BIS), the umbrella organization of central banks around the world, the exposure of banks in Spain to borrowers in Turkey amounts to $ 83.3 billion and the exposure of French banks to $ 38.4 billion. The exposure of Italian banks to Turkish borrowers amounts to $ 17 billion.
The exposure of British banks to Turkey amounts to 19.2 billion dollars, the exposure of banks from the United States reaches 18 billion dollars, and the exposure of Japanese banks amounts to 14 billion dollars.
Timothy Ash, senior strategist for emerging markets at Bluebay Asset Management, estimated that most of the impact of the current crisis in Turkey would be felt "probably mainly in bank exposure at this stage," CNBC reported. However, Ash added that exposure to the Turkish market is global in "Europe, the US, Japan, China, the Middle East - all of them."
At the same time, Ash estimated that there was little chance that Turkey would get into debt crisis. "I do not expect a huge global crisis, Turkey is still relatively small - at a level of $ 850 billion, and it is doubtful whether it will develop a debt crisis of countries," he added.
New sanctions on Turkey will be devastating | The Economist
Talks between the United States and Turkey are still ongoing, but many sanctions are pending, a law recently approved by the Senate threatens to prevent Erdogan's government from receiving a shipment of 100 F-35 fighter jets in response to the acquisition of a missile defense system from Russia, Will press international financial institutions such as the World Bank and the European Bank for Reconstruction and Development to pay loans to Turkey until the release of Pastor Andrew Branson and three local staff of the US Consulate, who have been held in custody for the past year.
New sanctions on Turkey, which is dependent on capital inflows, sunk into a $ 220 billion corporate debt and is now facing a continued collapse of the currency, will be devastating. Even the most symbolic measures against Turkish ministers, combined with news that the US will re-examine the lack of tax on it A $ 1.7 billion Turk has been enough to make one of the worst lows in more than a decade. On August 6, the currency recorded its sharpest daily fall against the dollar since 2001. The pound lost a third of its value in the past year. Since Erdogan was appointed prime minister in 2003, the lira has lost nearly 70 percent of its value. In general, the Turkish economy has been in trouble for some time. In light of cheap credit and fiscal spending, inflation climbed to nearly 16% last month, its highest level since 2003. The collapse of the lira forced some of Turkey's leading companies to reorganize billions of dollars in debt. Some are now on the verge of debt relief. Under pressure from Erdogan, who explained that high interest rates meant inflation, an idea that has no support among economists, and which insists on growth at all costs, the central bank did not do enough to contain the damage. To the surprise of most analysts, the bank did not raise the interest rate at its last meeting on July 24. Rising inflation may cause the pound to weaken further in order not to hurt the competitiveness of Turkish exports, said William Jackson, an analyst at Capital Economics. The bank can only hope to succeed in managing the collapse of the currency. Investor confidence is also dissipating. The end of the state of emergency on July 18 did not improve investor confidence as expected. Various emergency measures, such as the right to dismiss judges and civil servants on grounds of national security, were included in the new security law. Others were added to the constitution that tightened Erdogan's grip on the executive branch, allowing him to appoint and replace senior officials, and to weaken parliamentary oversight. After winning the last elections, it seems that Erdogan's control over fiscal and monetary policy will only increase. Erdogan abandoned his old economic team in favor of undocumented trustees, including his son-in-law, Brett Albayrak, whom he appointed as finance minister. None of these measures is expected to improve investor confidence.
https://www.themarker.com/wallstreet/1.6364451
