Turkish lira hits record low amid financial panic, rising United States tensions

President Donald Trump

The latest escalation between Ankara and Washington was denounced by the Turkish press, with pro-government daily Sabah saying "the currency attack" was no different from the attempted coup of July 2016.

Turkey remains at loggerheads with the United States over the detention for the last two years of American pastor Andrew Brunson and a host of other issues.

He also advised them to show solidarity by converting any stashed-away gold or foreign currency to Turkish lira in a bid to wage a "war of independence" against America.

Last week's freefall followed the U.S. doubling import tariffs on Turkish steel and aluminium.

It pegged its total credit exposure to Turkey at US$2.53 billion at the end of June, nearly entirely with non-sovereign counterparties or borrowers, and said it had US$2.05 billion of Turkish collateral.

The president, who says a shadowy "interest rate lobby" and Western credit ratings agencies are attempting to bring down Turkey's economy, appealed to his countrymen's patriotism.

"Also completely underestimated is Turkey's capacity to effectively shut down everything that happens in Brussels if they want to, because Brussels works on consensus and nothing, literally nothing happens without consensus", he said.

Erdogan said buying the lira was a patriotic duty for Turks, in what has become an "economic war" against foreign powers, most likely referring to the US.

Turkey is a major emerging market economy with $466 billion in foreign debt (about 78 percent in US dollars and about 18 percent in euros), or 52.9 percent of gross domestic product.

Turkish president Tayipp Erdogan today hit back at US President Donald Trump, saying it was "wrong" to double tariffs on Turkish metal imports.

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"I am once again calling on those in America: it is a pity that you choose a pastor over your strategic partner in North Atlantic Treaty Organisation", he said.

The prospect of a deal for Brunson's release appeared high as Turkish officials traveled to Washington this week, but the deal apparently fell apart over last-minute Turkish demands.

The currency is down 40 percent just this year, shaking global investors' confidence in the country.

The lira, which had already lost one-third of its value this year largely over worries about Erdoğan's wider control of the economy, is at a fresh record low, at one point losing 18%, its biggest fall since 2001.

"We are gearing up for trade in national currencies with China, Russia, Iran, Ukraine, which account for the largest bilateral trade volume".

"Another source of frustration relates to the partnership between the United States and the P.Y.D./Y.P.G., the Syrian branch of the P.K.K., an armed group that is responsible for the deaths of thousands of Turkish citizens since 1984 and that is designated a terrorist group by the United States".

Trump intensified the alarm on financial markets with his new tweet doubling the tariffs, noting for good measure the lira was sliding "rapidly downward against our very strong Dollar!".

Washington "must give up the misguided notion that our relationship can be asymmetrical", he said in the opinion piece. "Failure to reverse this trend of unilateralism and disrespect will require us to start looking for new friends and allies", Erdogan said.

Turkey's currency crisis spilled loudly on to the global stage Friday as other markets, including United States stocks, took at hit from concern about financial contagion to other countries and banks.

"The US and Turkey are breaking up".

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