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Erdogan warns of campaign against Turkey as lira plummets

10 August 2018

President Donald Trump announced tariff increases on Turkish metals as tensions between Turkey and the United States escalated. European and American bank stocks declined on concerns about their exposure to Turkey.

Waves from the crisis spread overseas, with investors selling off shares in European banks with large exposure to the Turkish economy.

Tukey's Treasury and Finance Minister Berat Albayrak speaks at an event introducing the "new economic model" at the Dolmabahce Palace in Istanbul on Aug 10, 2018.

His characteristic defiance in the face of the crisis has further unnerved investors.

"In this process, we will finely work every single detail as a wide spectrum including all national and global stakeholders", he said in the first part of his speech, referring to Turkey's Medium-Term Economic Plan (OVP), which will soon be renamed.

"If you have dollars, euros or gold under your pillow, go to banks to exchange them for Turkish lira. This is a national, domestic battle", he told a crowd in the northeastern city of Bayburt. "Hopefully we will overcome this disaster and we will also successfully overcome this economic war", Erdogan said.

European shares fell on Friday morning as worries over a plunging Turkish lira weighed, with banks most exposed to the country among the biggest losers.

"The dollar can not block our path".

Shortly after Mr Trump's tweet, Mr Erdogan spoke on the phone with Russian President Vladimir Putin.

Ahead of a much-anticipated public address by President Recep Tayyip Erdogan, the lira plunged more than 11 per cent to a fresh record, headed for its worst week since 2001.

"Don't forget, if they have their dollars, we have our people, our God". In response, the currency renewed its sell-off.

Trump's tweet caused a further drop in the Turkish currency, which is now down 13 percent on the day. As the currency drops, Turkish companies and households with debt in foreign currencies see their debts expand. Erdogan has been putting pressure on the central bank to not raise interest rates in order to keep fueling economic growth.

Washington and Ankara are at odds over the detention of USA evangelical pastor Andrew Brunson on terrorism charges in Turkey. "I would say we would define progress as Pastor Brunson being brought home", Nauert said. High level meetings in Washington between USA and Turkish officials ended this week without an apparent resolution. "Today I am instructing my friends that we will freeze the assets of USA secretaries of justice and interior in Turkey", he said last week.

Erdogan warns of campaign against Turkey as lira plummets