Turkish relations spiraling amid tit-for-tat penalties over detained pastor

Markets Insider

Markets Insider

The Turkish currency lost nearly 10 percent on Monday and nerves were briefly tested again as Erdogan urged Turks to boycott USA electronic products in response to recent criticism from Washington.

"We will boycott United States electronic goods", Erdogan said in a speech in Ankara, again showing no sign of compromise in the dispute. Details of how a boycott of American electronics might be enforced were not presented during Erdogan's speech.

"If (the United States) have the iPhone, there's Samsung on the other side", he said, referring to USA giant Apple's iconic phone and the top South Korean brand.

"Erdogan believes that you need to keep interest rates low to keep the economy growing and going, but also to keep the inflation rate low which really goes against economic thinking", she explained.

The dollar has hit another 13-month high against a basket of major currencies today, as safe-haven demand over fears of fallout from the Turkish lira's recent drop boosts the U.S. currency. The currency has lost more than 40 per cent of its value over the past year and fell to an all-time low of 7.24 to the dollar on Monday.

While the economic penalties would probably do little to dent USA economic interests, Erdogan's threat shows that the standoff over the fate of an American pastor held in Turkey isn't going to end soon. The Trump administration introduced the economic sanctions as the result of an American Christian pastor who is now standing trial on alleged terrorism charges.

The Turkish lira hit a record low of 7.23 per dollar on Sunday, after President Recep Tayyip Erdogan remained defiant in a standoff against its North Atlantic Treaty Organisation ally the United States.

In a rare joint show of force, the Trump White House and the US State Department have been operating in sync, which wouldn't be unusual during a normal presidency, but is exceptionally weird for the Trump regime.

Underscoring lingering concerns toward the crisis in Turkey, the dollar hovered near a 13-month peak against a basket of currencies, seen to be supported by its safe-haven status.

It's unclear what the USA trying to achieve by targeting an ally with whom it worked together in places including Somalia, Afghanistan and Kosovo.

"We protect our lira". The lira is, however, down about 40 per cent for the year against the USA dollar and had been down 25 per cent in a week before a slight recovery on Tuesday. The latest decline was accelerated after U.S. President Donald Trump tweeted that he would double tariffs on Turkish steel and aluminum. Turkey's Central Bank has stepped in with measures it hopes will reassure Turks and financial markets.

"They do not refrain from using the economy as a weapon against us, as they tried in the areas of diplomacy, military, or efforts for social and political instability", Erdogan said.

Brunson's lawyer, Ismail Cem Halavurt, said the court had up to seven days to decide.

United States embassy charge d'affaires Jeffrey Hovenier on Tuesday visited Brunson in the western city of Izmir.

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