Trump doubles steel and aluminium tariffs on Turkey as lira nosedives

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The Turkish lira suffered its worst one-day loss in a decade Friday after President Donald Trump announced that the United States would hike tariffs, prompting investor confidence to slump.

It argued that the country accounted for less than 2 percent of group revenues and a 10 percent fall in the lira would affect its CET1 ratio - capital that must be set aside as a buffer against financial shocks - by only around 2 basis points.

Waves from the crisis spread overseas, with investors selling off shares in European banks with large exposure to the Turkish economy.

In a tit-for-tat response to the USA sanctions, Erdogan responded by announcing that the assets in Turkey of the United States secretaries of "justice and interior" would be frozen.

The currency has fallen 66 per cent since the start of the year, pushing up the cost of goods for Turkish people and shaking worldwide investors' confidence in the country.

Trump announced the doubling of aluminum and steel tariffs in a tweet Friday, citing bilateral strains.

Trump said the tariffs on aluminum imports would be increased to 20 per cent and those on steel to 50 per cent as the Turkish Lira "slides rapidly downward against our very strong Dollar!" -Turkish relationship, a deterioration made worse by Turkey's worsening human rights record and increased cooperation with Russian Federation and Iran in Syria.

Without naming countries, Mr Erdogan said supporters of a failed military coup two years ago, which Ankara said was organised by a US-based Muslim cleric, were attacking Turkey in new ways since his re-election two months ago.

Concerns mounted Friday after a report in the Financial Times that the supervisory wing of the European Central Bank had over the last weeks begun to look more closely at eurozone lenders' exposure to Turkey.

However, the White House later clarified that Trump's announcement "authorized the preparation of documents" to raise the tariffs.

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Turkey's trade ministry said the tariffs were against World Trade Organisation rules. Like many other countries around the world they are at odds with the Trump administration and have been hit with US sanctions.

In what appears to be a diplomatic riposte, Turkey later said Erdoğan had held a phone call with Russian president Vladimir Putin to discuss economic ties, suggesting it might gravitate further away from its North Atlantic Treaty Organisation allies toward cooperation with Russia, whose relations with the west are at their lowest since the cold war.

A Turkish man waits to change his US dollars with Turkish liras inside a currency exchange shop in Ankara, Aug. 10, 2018. On Friday, he said the country had to take steps in answer "to those who have waged an economic war against us".

The lira, which has lost a third of its value this year, fell on his comments and was trading at around 6.05 to the dollar after he spoke, almost 9 percent weaker on the day.

USA officials have said the courts would require sufficient evidence to extradite the elderly Gulen, who has denied any involvement in the coup.

The United States placed sanctions on two Turkish officials earlier this month because of Brunson's case.

Turkey's sovereign dollar-denominated bonds tumbled with many issues trading at record lows. Since the last financial crisis, Turkey has posted impressive growth figures but over recent years this growth has been accompanied by increasing debt.

"I don't think foreign banks will be willing to lend to Turkish banks".

Treasury and Finance Minister Berat Albayrak has vowed to execute Turkey's new economic model together with "all national and global stakeholders", while stressing that a "decisive" approach and the Central Bank's independence would be maintained.

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