Turkey on the Economic Brink, Explained in a Dozen Charts

Turkey to reveal 'new economic model' on Friday

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Shares in leading USA banks also plunged significantly with Bank of America, Goldman Sachs, Morgan Stanley, and J.P. Morgan Chase all falling over one percent.

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President Tayyip Erdogan told Turks to exchange gold and dollars into lira as the currency tumbled after President Donald Trump doubled US tariffs on metals imports from Turkey.

Investors are concerned with Erdogan's firm grip on Turkish monetary policy.

The Turkish lira plunged on Friday, raising questions about the country's financial stability, as investors anxious about the president's unorthodox economic policies and a dispute with the United States that has led to sanctions.

President Donald Trump abruptly announced Friday that he would double the rate of import tariffs on Turkish metals - forcing Turkey to ask citizens to buy its own crashing currency.

In a tweet, Mr Trump said the currency was weak against "our very strong dollar", adding that "US relations with Turkey are not good at this time".

A money changer counts Turkish lira banknotes at a currency exchange office in Istanbul, Turkey August 2, 2018.

A diplomatic source, however, familiar with talks of Turkish deputy foreign minister Sedat Onal in Washington this week, told The National that exchanging Mr Brunson for Mr Atilla is not on the table from the USA side.

This week, the Turkish lira has fallen 23% against the dollar, losing almost a quarter of its value.

The tweet served to place intensified pressure on the plummeting lira, despite President Erdogan's attempts to limit the damage.


Without naming countries, Erdogan said supporters of a failed military coup two years ago, which Ankara says was organized by a USA -based Muslim cleric, were attacking Turkey in new ways since his re-election two months ago to a new executive presidency.

Turkish President Tayyip Erdogan has dismissed concerns over the tumbling lira, calling on Turks to "have no worries", after the currency hit record lows in recent weeks on the back of a widening rift with the United States.

Turkish newspaper Hurriyet and other media reports quote Erdogan as making the comment to a group of worshippers following traditional Muslim Friday prayers during a visit to the northern city of Bayburt. "Don't worry", Erdogan assured the crowd.

Turkey has defied the United States on several fronts. But now, the relationship appears to have gone sideways.

"Confidence needs to be regained". In response, the currency renewed its sell-off.

One of the triggers of the turmoil has been a standoff with the US over a detained American pastor that Turkey, a North Atlantic Treaty Organisation ally, has put on trial for espionage and terror-related charges linked to a failed coup attempt in the country two years ago. Hard currency debt issued by Turkish banks suffered similar falls.

Erdogan enjoys the support of many Turks even though food, rent and fuel prices have all surged.

The latest escalation came as Turkey's Economy Minister Berat Albayrak, who is Erdogan's son-in-law and a trusted lieutenant, unveiled what was touted as a new economic plan, pledging Central Bank independence, tighter budget discipline and sustainable and healthy growth.

Presenting the government's new economic model, he said the next steps of rebalancing would entail lowering the current account deficit and improving trust. There would be a transformation in the finance ministry with regards to taxation, he said.

This did nothing to revive the currency.

"The last time I can remember a currency exploding into a similar acceleration of weakness to what we have seen in the past 24 hours is the Russian rouble crisis that transpired late in 2014", said Jameel Ahmad, head of currency strategy at FXTM.

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