Turkey's Erdogan stands by opposition to high interest rates

Monday, 13 Aug, 2018

He wrote and Washington's unilateral actions against Turkey undermine American interests and force Ankara to search for new allies.

In a Twitter post on August 10, the USA president also referenced the rapid decline of the North Atlantic Treaty Organisation ally's national currency against "our very strong dollar".

Brunson was indicted for allegedly having links with the outlawed Kurdistan Workers' Party and Fethullah Gulen, an exiled Turkish preacher who has allegedly masterminded the failed coup attempt in 2016 to topple Erdogan.

On June 21, Turkey's retaliatory tariffs went into effect on 4 to 70 percent of more than $1 billion worth of US goods.

Trump intensified the alarm on financial markets with a new tweet on the Turkey row.

Friday morning, President Trump tweeted about the situation with Turkey, announcing further tariffs and noting that relations between the USA and Turkey are "not good".

He indicated Turkey's relationship with Washington was imperiled.

Trump made the 50 percent steel tariff official with a presidential proclamation Friday evening. The lira fell further after Trump's tweet. Since then, Trump and his vice-president Mike Pence have repeatedly called for his release while Ankara said the decision was up to the courts. It did not disclose details, but suggests Turkey might gravitate further away from its North Atlantic Treaty Organisation allies toward cooperation with Russian Federation, whose relations with the West are at their lowest since the Cold War. "Don't heed them", Erdogan said. He says higher interest rates lead to higher inflation, the opposite of what standard economic theory says.

Take them immediately to the banks and convert them into liras.

After winning a June election with revamped powers, he tightened his control over the central bank and appointed his son-in-law Berat Albayrak to head a newly-empowered finance ministry.

Erdogan appealed to a crowd in the city of Bayburt to exchange dollars and gold for Turkish lira to prop up the plunging currency. "This is a domestic and national struggle".

"They tell us to release the priest by Wednesday 6:00 pm, otherwise the sanctions will begin", said Erdogan, adding Turkey was not a country to agree to such requests.

Turkish President Recep Tayyip Erdogan stood by his opposition to high interest rates on Sunday despite sharp falls in the country's currency, saying the lira's weakness did not reflect the Turkey's economic realities.

Erdogan on Saturday repeated a call to Turks to help support the lira to win what he described was a "war of independence".

Asli Aydintasbas, senior fellow with the European Council on Foreign Relations, stated that Erdogan's speech "was clearly defiant", but Turkey's economic situation continues to appear ever more dire. Debt and borrowing in foreign currencies has private companies over-leveraged and frozen, hoping that restructuring will save the businesses.

On Saturday, Erdoğan said it was a pity the U.S. was choosing Brunson over its strategic North Atlantic Treaty Organisation ally.

"The price of the food that I buy increases day by day, the fuel that I put in my vehicle to distribute lunches is more expensive, but I can not raise my prices from one day to the next", she said.

Erdogan is also upset at the protection U.S. coalition forces are providing the Kurds in Syria, against the invading Turkish army.

"It is making an operation against Turkey ..."

This is a very bad rationale for hiking tariffs on a country's exports.