Today, Donald Trump, the President of the United States of America, has announced large increases to the tariffs imposed on Turkey as lira, the currency of the country, continues to nosedive.
This morning, the lira dropped to a record low and has now fallen by 18 percent today to 6.5 lira vs. the dollar, as compared with 5.5 lira last night, as the country’s deepening monetary crisis and diplomatic relations with the United States deteriorated.
This week, the currency has lost almost a third of its value.
On Twitter, Trump posted: “I have just authorised a doubling of tariffs on steel and aluminium with respect to Turkey as their currency, the Turkish lira, slides rapidly downward against our very strong dollar!
He added: “Aluminium will now be 20 percent and Steel 50 percent.”
He concluded: “Our relations with Turkey are not good at this time!”
The relations between Turkey and the United States have not been helped by Turkey putting an American citizen in jail for an alleged attempted coup in 2016.
The drop has also affected European stocks today, with the Stoxx Europe 600 dropping by three percent earlier on today.
Tayyip Erdogan, the President of Turkey, has remained to be defiant despite the lira being in a free fall.
Today, he informed the Turks that they had nothing to fear. He added that the drop was because of the “campaigns” against the nation.
He stated: “Don’t forget, if they have their dollars, we have our people, our God.”
He added: “We are working hard. Look at what we were 16 years ago and look at us now.”
Some investors expressed their concerns with the firm grip of Erdogan on Turkish monetary policy. He is a self-described “enemy of interest rates” and he wants banks to lend cheap credit in order to fuel growth, something that experts are fear could seriously have a huge impact on the economy.
Last May, Erdogan even urged the Turks to convert their savings into lira, saying: “If there is anyone who has dollars or gold under their pillows, they should go exchange it for liras at our banks. This is a national, domestic battle.”