Published: Sat, August 18, 2018
Finance | By Cynthia Curry

Turkey reacted angrily to new U.S. sanctions

Turkey reacted angrily to new U.S. sanctions

The embattled lira fell three percent yesterday after a Turkish court rejected a U.S. pastor's appeal for release, drawing a stiff rebuke from Mr Trump, who warned the United States would not take the detention of Andrew Brunson "sitting down".

"We've already responded based on the World Trade Organisation rules and will continue to do so", state-run Anadolu news agency quoted him as saying.

Turkey retaliated with some 533 million dollar of tariffs on some United States imports - including cars, tobacco and alcoholic drinks - and said it would boycott USA electronic goods, singling out iPhones.

Trump on August 10 said Turkey would be subject to a 20 percent tariff for aluminum and a 50 percent tariff for steel, effectively doubling what the administration had imposed on Ankara in March.

Another steep decline in the Turkish lira on Friday pushed emerging market equities lower and kept other world markets cautious, overshadowing hopes that an upcoming U.S.

Relations between Turkey and the USA are at a low point over the detention of Andrew Brunson, whom Turkish President Recep Tayyip Erdogan's government accuses of being involved in an attempted coup in 2016. Washington has introduced sanctions against members of the Turkish government, citing the case and insisting that the pastor is innocent.

President Trump's decision to double Section 232 tariffs on Turkish steel and aluminum to gain leverage in a diplomatic dispute is a unsafe departure from the statute that could cause significant uncertainty for US industries, according to a major business group. Mr Erdogan said: "Today some people are trying to threaten us through the economy, through interest rates, foreign exchange, investment and inflation".

Trump speaks at defense bill signing in NY
Some lawmakers wanted to reinstate sanctions on ZTE for illegally shipping products to Iran and North Korea. The administration is also angered by Turkey's detaining of a USA pastor on terrorism charges.

American officials have also protested the detentions of several Turkish employees of the USA diplomatic mission in Turkey, including Metin Topuz, Hamza Ulucay and Mete Canturk.

The president called the charges against Brunson "phony", adding that Brunson was not a spy.

That Istanbul will host a meeting of heads of Russia, Turkey, Germany and France, in late July, in one of his interviews said Erdogan. "Having said that, we fully support the president's approach".

For years Turkish firms have borrowed in dollars and lira to take advantage of lower interest rates.

Moody's likewise cited the weakening lira and downgraded Turkey's debt to Ba3, as well as "heightened concerns" for the central bank's independence and "the lack of a clear and credible plan" to address the causes of recent financial troubles. It says the case against Atilla, sentenced to 32 months in prison, was politically motivated.

The escalating feud between the longtime North Atlantic Treaty Organisation allies is playing out against a backdrop of economic tumult in Turkey, which has seen steep drops in the country's currency, the lira. This week, Qatar pledged $15 billion in support to Turkey.

Turkish markets will be closed from midday on Monday for the rest of the week for the Muslim Eid al-Adha festival.

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