Turkish lira hits record low amid financial panic, rising US tensions

Turkey’s currency sank to record lows on Friday amid panic about the country’s economic health and souring relations with the United States.

Turkey’s lira sank as low as 20 percent against the U.S. dollar Friday before settling at a 15 percent drop. One U.S. dollar traded at 5.96 lira by 2:15 p.m.

Investors have become increasingly concerned with the faltering Turkish economy, its central bank’s willingness to respond to the downturn and the impact it could have on global financial markets, according to multiple reports.

{mosads}Turkish President Recep Tayyip Erdoğan said Friday that his country was the target of a global financial war and urged citizens to exchange their dollars, euros and gold for lira to bolster the economy.

“This is a domestic and national struggle,” Erdoğan said, according to The Associated Press. “If they have their dollar, we have the people, we have Allah.”

Turkey’s financial crisis and further U.S. pressure spurred more concern among investors as fears appeared to spread to American markets.

The Dow Jones Industrial Average had lost more than 270 points by 2:45 p.m. Friday, a 1 percent loss, while falling bank stocks dragged the S&P 500 index down roughly 0.9 percent. The Nasdaq composite was down more than 0.8 percent as technology stocks also dropped.

Prices for gold and Treasury bonds, investments seen as safe havens during international turmoil, also rose.

Deteriorating ties between the U.S. and Turkey — both NATO members — have also alarmed investors.

The lira’s slide came after a U.S. delegation from Washington, D.C., left Turkey without making progress toward the release of Andrew Brunson, an American pastor detained by Erdoğan’s government since 2016.

The Treasury Department targeted Turkey’s justice and interior ministers with financial sanctions last month after the government refused to allow Brunson to return to the U.S.

President Trump said Friday that the U.S. will also double tariffs on steel and aluminum imported from Turkey as relations between the NATO allies worsen.

“I have just authorized a doubling of Tariffs on Steel and Aluminum with respect to Turkey as their currency, the Turkish Lira, slides rapidly downward against our very strong Dollar! Aluminum will now be 20% and Steel 50%. Our relations with Turkey are not good at this time!” Trump tweeted Friday morning.

“I hate it came to this point, but [Trump] really had no other choice,” Sen. Lindsey Graham (R-S.C.) tweeted Friday. “Turkey is an important strategic partner militarily and economically. I hope we can soon get Pastor Brunson and other Americans released in a win-win fashion for both the US and Turkey.”

Trump’s move to double tariffs on Turkey was even praised by one of the president’s most frequent Democratic critics.

Rep. Ted Lieu (D-Calif.), who has voiced support for impeaching the president, tweeted Friday, “On this I agree with [Trump]. Turkey has been trending towards authoritarianism & becoming more anti-American.” 

He also urged Trump to recognize the 1915 Turkish slaughter and exile of 1.5 million Armenians as a genocide, which U.S. presidents have declined to do for decades.

U.S. lawmakers in both parties have expressed outrage in recent years as Erdogan expands his power over the Turkish government while purging political rivals and journalists.

Tensions between the NATO allies also flared in May 2017 after Erdoğan’s personal security forces attacked demonstrators protesting his visit to the Turkish Embassy in Washington, D.C.