Financial Times: Turkish Lira Plunges as Trump Threatens Tariffs

Turkey’s currency is falling against the dollar even as the US president threatens more tariffs – 20 percent on aluminum and 50 percent on steel. Turkey’s president calls the actions “economic war.” Turkey, like the United States, is among the top 10 countries that produce steel. The lira’s fall “ricocheted into Turkey’s bond market, sending the yield on the local currency 10-year bond above 20 per cent,” reports Financial Times, adding that investors may be losing confidence in the government’s ability to ease debt. “The onslaught on the currency comes after years in which the economy of the strategically vital Nato state has prospered, partly because of ultra-loose monetary policy in the US and Europe, which encouraged investors to seek higher returns in Turkey and other emerging markets. But the US and the eurozone are now reining in their monetary policy, and economists have signalled unease at an increase in Turkish companies’ debt.” The yield on Turkish 10-year bonds nears 20 percent. US leaders also demand release of an evangelical cleric as investors worry about exposure of European and Asian banks with exposure to Turkish debt. Turkey is the world’s 17th largest economy. – YaleGlobal