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.
USA channel CNN also said the White House "did not offer any explanation as to how US national security is threatened" in the statement made regarding the topic. The lira is now down 36% this year and bond yields have sky-rocketed.
President Donald Trump says the United States has chose to increase tariff rates on Turkish steel and aluminum. And so he announced he is going to double the steel and aluminum tariffs on them to make up for the fact "their currency" has slid so "rapidly downward against our very strong Dollar!"
"Our relations with Turkey are not good at this time!" he said in an early morning post. Financial upheaval there risks further destabilizing an already volatile region.
One of the triggers of the turmoil has been a standoff with the USA over a detained American pastor that Turkey, a North Atlantic Treaty Organisation ally, has put on trial for espionage and terror-related charges linked to a failed coup attempt in the country two years ago. On Friday, Trump announced he would double aluminum and steel tariffs on the North Atlantic Treaty Organisation ally.
"Section 232 tariffs are imposed on imports from particular countries whose exports threaten to impair national security as defined in Section 232, independent of negotiations on trade or any other matter", she explained. Then there is the fact that Turkey has detained a U.S. pastor on terrorism charges which has further angered the USA administration and led to sanctions on two Turkish government officials. According to figures from the Turkish Government, for the period of 2002 to October 2017, Turkish direct investments in the United States reached $3.7 billion while USA investments in Turkey amounted to $11.1 billion, second only to the Netherlands' 21.6 billion. On Thursday Ergodan said Turkey will withstand the economic pressure.
"If you have dollars, euros or gold under your pillow, go to banks to exchange them for Turkish lira".
"This is a national, domestic battle".
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He railed against "those waging economic war" against Turkey.
Erdogan framed Turkey's currency crisis as a "national battle" against economic enemies, namely the USA, saying "if they have their dollar, we have the people, we have Allah".
The CDS surge shows investors are betting Turkey will now have more trouble paying its debt and is a good barometer for investor fears who now rank Turkey more risky than Greece. "I am afraid there will be a bank run in Turkey, people rushing to withdraw their deposits".
US lawmakers in both parties have expressed outrage in recent years as Erdogan expands his power over the Turkish government while purging political rivals and journalists. It is host to an X-band radar, a critical part of the Western alliance's missile defence system again Iran. Import taxes for aluminum will be 20 percent.
"If they have their dollar, we have the people, we have Allah, " he said.
In what appeared to be a diplomatic slight, Turkey announced soon after Trump's tweet that Erdogan had held a phone call with Russian President Vladimir Putin about "strengthening economic and trade ties". Gulen has denied the allegation.
Turkey has arrested an American pastor and put him on trial for espionage and terror-related charges linked to a failed coup attempt in the country two years ago. His cause resonates with Christian conservative supporters of Trump, who could be influential as Republicans seek to retain control of Congress in midterm elections in November. But Israel released that woman last month, and pastor Andrew Brunson of North Carolina remains in a Turkish prison. He offered no further details.