Turkish lira resumes fall after Trump sanctions threat
- Author: Wendy Palmer Aug 19, 2018,
Aug 19, 2018, 0:29
Turkey's state-run news agency says a higher Turkish court has also rejected an appeal for the release from detention of an American pastor who is at the center of a Turkish-U.S. spat.
The United States on Wednesday ruled out removing steel tariffs that have contributed to a currency crisis in Turkey even if Ankara frees a USA pastor, as Qatar pledged US$15 billion in investment to Turkey, supporting a rise in the Turkish lira.
It also forecast that inflation would peak at 22 percent over the next four months, and said the weakening lira was putting pressure on the indebted corporate sector and had considerably increased the funding risk for Turkey's banks.
Iran has been furious over US President Donald Trump's decision to pull out of an global agreement on Iran's nuclear program and re-impose sanctions on Tehran.
Turkish diplomats are reportedly close to releasing a USA pastor at the center of a diplomatic spat between Turkey and the US.
Brunson was charged with terror offenses by a Turkish court and has been held since October 2016.
The Turkish lira has been in a steady slide and reached an all-time low earlier this week.
Turkey is reeling from a massive sell-off of its currency as Washington imposed sanctions and threatened new ones if an American pastor under house arrest isn't released.
Last Wednesday, in retaliation, Turkey increased tariffs on several US -origin products, including alcohol and tobacco products and cars.
The Canadian dollar strengthened against its US counterpart after data showing a surge in domestic inflation triggered increased bets on another Bank of Canada interest rate hike as soon as September.
Investors are concerned that Turkey's has amassed high levels of foreign debt to fuel growth in recent years, and as the currency drops, that debt becomes more expensive to repay, leading to potential bankruptcies.
Brunson, who is from North Carolina, was swept up in the aftermath of a failed 2016 coup attempt. Turkey's dollar bonds fell, while the cost of insuring exposure to Turkish debt rose.
Though Turkey's financial troubles did not originate with the battle over Brunson's release, the moves have sped up the Turkish economy's decline.
While the Brunson matter appeared far from being resolved, Turkish President Tayyip Erdogan got a shot in the arm from Qatar's Emir, who approved a package of economic projects, investments and deposits after the two met in Ankara.
According to the Middle East Eye, officials in Ankara are willing to concede to United States demands for the freedom of Andrew Brunson, an evangelical preacher accused of playing a role in the attempted coup there in 2016.
"We will pay nothing for the release of an innocent man, but we are cutting back on Turkey!" he said in a tweet Friday.
Turkey has repeatedly criticized the USA for not condemning the coup attempt two years ago. He criticized Turkey for "holding our wonderful Christian Pastor".