ERBIL (Kurdistan 24) – The Turkish Lira sank to a new historical low, breaking record after record as it depreciated to 5.42 in value against the US Dollar overnight amid concerns regarding the independence of the country’s Central Bank and a deepening diplomatic crisis with Washington over the continued detention of an American pastor.
President Recep Tayyip Erdogan over the weekend promised to act “in kind” in response to the US sanctioning his Interior and Justice ministers over their role in the arrest of pastor Andrew Brunson. Following his statement, Erdogan imposed his own sanctions on two of President Donald Trump’s cabinet members.
After losing more than six percent of its value, in a one day spike, the Lira regained less than half of its losses. On Tuesday, however, it maintained its steep decline, hovering around 5.30 toward the end of the afternoon.
The Euro-Lira parity was also volatile, as it started the day at 5.90 but reached up to 6.20 near midnight on Monday.
The Turkish Central Bank’s decision last month to keep interest rates unchanged in spite of market observers expecting a rise added to the depreciation, raising fears that the country’s monetary authority was now more under the control of Erdogan’s government, a self-styled “enemy of interest rates.”
After winning the June elections and obtaining greater powers, the Turkish leader appointed his son-in-law, Berat Albayrak, as Chief of Finance and Treasury in his new executive presidential system of governance.
The Turkish economy, well integrated with foreign markets, is highly vulnerable to changes in currency exchanges with main import items such as cars, electronics, petroleum, iron, and gold priced in US Dollars directly affecting consumers and investors alike.
The Trump administration’s trade war with adversaries, such as China, and allies like its North American neighbors and European partners, included Turkey as well when it imposed tariffs on steel and aluminum.
In response to Turkey’s retaliatory move, Reuters reported on Friday that the US Trade Representative said Turkey’s duty-free access to US market was under review.
Ankara has also decided to resist renewed American sanctions on Iran, which came into effect Monday, with Foreign Minister Mevlut Cavusoglu telling the state media Turkey is opposed to Trump’s policy vis-a-vis Tehran, and that the world had “moved on from being a place where all others had to bow to one country.”
Both Erdogan and Cavusoglu accused Israel of masterminding a concerted attack on their country.
“Mr. Trump has been deceived big time by Zionists,” Erdogan said.
Editing by Nadia Riva