President Tayyip Erdogan told Turks on Friday to sell their gold and U.S. dollars to support the country’s currency which plunged after U.S. President Donald Trump escalated a feud with NATO ally Turkey by doubling tariffs on metals imports.
The Turkish lira TRYTOM=D3 has long been falling on worries about Erdogan's influence over monetary policy and worsening relations with the United States.
On Friday the currency dropped as much as 18 percent at one point, the biggest one-day fall since a 2001 financial crisis in Turkey.
Reverberations spread through global financial markets, with European stock markets especially hit as investors took fright over banks’ exposure to Turkey. U.S. stocks were also rattled.
The lira has lost more than 40 percent this year. It hit a record low after Trump announced he had authorized higher tariffs on imports from Turkey, imposing duties of 20 percent on aluminium and 50 percent on steel.
The lira, Trump noted on Twitter, “slides rapidly downward against our very strong Dollar!”
“Our relations with Turkey are not good at this time!” he wrote.
An important emerging market, Turkey borders Iran, Iraq and Syria and has been mostly pro-Western for decades. Financial upheaval there risks further destabilising an already volatile region.
Without naming countries, Erdogan said supporters of a failed military coup two years ago, which Ankara says was organised by a U.S.-based Muslim cleric, were attacking Turkey in new ways since his re-election two months ago.
The new duties on Turkey are double the level that Trump imposed in March on steel and aluminium imports from a range of countries. The White House said he had authorized them under a section of U.S. trade law that allows for tariffs on national security grounds.
Turkey’s trade ministry said the tariffs were against World Trade Organization rules.