Erdogan accuses USA of seeking to stab Turkey 'in the back'

Erdogan accuses USA of seeking to stab Turkey 'in the back'

The lira hit a record low of 7.24 to the dollar after the country's finance minister said Ankara was planning to roll out an "action plan" on Monday in response to the crisis. The lira has lost most than 40 percent of its value so far in 2018.

The Organization of the Petroleum Exporting Countries forecast lower demand for its crude next year as rivals pump more and said top oil exporter Saudi Arabia, eager to avoid a return of oversupply, had cut production.

Trump announced August 10 via Twitter that the United States would be doubling steel and aluminum tariffs for Turkey "as their currency, the Turkish Lira, slides rapidly against our very strong Dollar!"

He also said the government had no plans to seize foreign currency deposits or convert deposits to the Turkish lira.

His assurance came after Turkey's president blamed the lira's plunge on a plot against the country.

"What is the reason for all this storm in a tea cup?" he said."There is no economic reason for this".

BBVA did not immediately comment on the analysts' data but a spokesman for the bank noted that BBVA's CEO Carlos Torres recently said every 10 pct depreciation of the lira in Turkey leads to an impact of around 2 basis points on the bank's capital ratio.

Erdogan has repeated calls for Turks to sell dollars and buy lira to shore up the currency, while also telling business owners not to stock up on dollars.

Businesses should "know that keeping this nation alive and standing isn't just our job, but also the job of industrialists, of merchants".

Why is the lira falling?

Experts have blamed the sharp slide in the lira on fears the country is descending into an economic crisis.

Turkey's stock market has fallen 17 per cent, while government borrowing costs have risen to 18 per cent a year. Meanwhile, inflation has hit 15%.

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Turkey's situation is among the most precarious among emerging markets because so much of its growth was fueled with debt in foreign currencies.

Relations between the United States and Turkey had plunged to their lowest in decades following unprecedented sanctions declared by the United States on Turkey over US pastor Andrew Brunson, who faces terrorism charges and up to 35 years in prison if found guilty.

U.S. State Department spokesperson Heather Nauert said on Thursday that although the two sides "had wide-ranging meetings at the State Department and with other departments here in Washington", the U.S. side "would define progress as Pastor Brunson being brought home".

Mr Brunson has been detained for almost two years, accused him of links to the outlawed Kurdistan Workers Party and the Gulenist movement, which Turkey blames for a failed coup in 2016.

Trump's decision to double USA tariffs on Turkish steel and aluminium has only exacerbated the situation.

What are officials doing about it?

"We will not give them the time of day".

Early last month, he claimed the exclusive power to appoint the bankers that set interest rates - and to cement his control he has put his son-in-law in charge of economic policy.

Erdogan also hit back at U.S. authorities for convicting Mehmet Hakan Atilla, 47, deputy director general of Turkish lender Halkbank on charges of helping Iran evade United States sanctions on billions of dollars of oil proceeds.

Simon Derrick, chief currency strategist at BNY Mellon, said the central bank's measures are unlikely to be enough.

The currency pulled back from a record low to the dollar on Monday after the central bank pledged to provide liquidity, but it remained under selling pressure and its meltdown continued to rattle global markets.

The United States reportedly offered to let Atilla serve out the rest of his term in Turkey once bureaucratic hurdles to his extradition were cleared.

All eyes will be on the lira when foreign exchange markets reopen on Monday after the weekend pause.

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