President Donald Trump doubled USA tariffs on Turkish steel and aluminium, saying "US relations with Turkey are not good at this time". The central bank noted that Spain's BBVA, Italy's UniCredit and France's BNP Paribas all have significant exposure to Turkish debt and that a crashing lira could affect repayment of foreign currency loans.
The United States had warned it was reviewing Turkey's duty-free access to its markets, after Ankara imposed retaliatory tariffs on U.S. goods in response to American tariffson steel and aluminium.
"Unless the United States starts respecting Turkey's sovereignty and proves that it understands the dangers that our nation faces, our partnership could be in jeopardy", the Turkish president stated.
USA sanctions and president Erdogan's tightening control over monetary policy are driving the fall, which sent the lira to an all-time low of above 6 to the dollar this morning.
Turkey's lira plummeted as much as 18 percent on Friday as worries about President Tayyip Erdogan's influence over monetary policy and worsening US relations snowballed into a market panic.
Trump's announcement saw the Turkish lira drop even further, crashing to a 19 percent daily loss against the greenback.
He also condemned as "unacceptable, irrational and ultimately detrimental", the sanctions imposed by the United States on several Turkish cabinet members over the Brunson issue.
Erdogan spoke briefly Thursday night and alluded to problems with the currency, saying "various campaigns" were underway, adding: "If they have dollars, we have our people, our righteousness and our God".
The slump is attributed to the tensions with the U.S. and concerns about President Recep Tayyip Erdogan's control of monetary policy.
On Saturday, Erdoğan said it was a pity the United States was choosing Brunson over its strategic North Atlantic Treaty Organisation ally.
"There is zero credibility in the Central Bank of Turkey and zero credibility in Turkish policy making". Those words will further alarm many investors, suggesting that Turkey will neither impose a conventional economic programme to protect its currency nor find a way to come to terms with the USA over a tangle of issues that have brought them to loggerheads - chiefly, the jailing of United States missionary Andrew Brunson on terrorism charges. Against the yen, the euro slid 1.56 percent to 126.03 yen, a more than two-month low.
Putting a 50 percent tariff on a foreign country's steel exports isn't the most conventional way to secure an imprisoned American's relief. It was almost 6 per dollar early Friday morning in D.C.
Earlier on Friday, Trump ramped up his attack on Turkey by doubling USA tariffs on Turkish aluminium and steel imports to 20 percent and 50 percent, respectively.
Washington has demanded the pastor's release and imposed financial sanctions on two Turkish ministers and warned of additional measures.
Investors are concerned with Erdogan's firm grip on Turkish monetary policy.
It is a Coen brothers-level farce the people of Turkey and every other emerging market that's been caught up in what's now a broader currency sell-off are not laughing at. He urged Turkish citizens to immediately exchange their gold and dollars for lira.
It said it would support steel and aluminium exporters on all worldwide platforms, and the USA remained an important trade partner. That caused a further drop in the lira.
New Finance Minister Berat Albayrak - Erdogan's son-in-law - acknowledged that the central bank's independence was critical for the economy, promising stronger budget discipline and a priority on structural reforms.
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