August 11, 2018

How a currency meltdown in Turkey threatens Europe

The Turkish currency plummeted as much as 17% against the dollar, reflecting a range of concerns, including tensions with the United States and the unwillingness of Turkish authorities to raise interest rates.

President Donald Trump, who imposed sanctions on senior Turkish officials earlier this month for their role in the detention of an American pastor, upped the stakes on Friday with a promise to increase metals tariffs on Turkey.

Turkish President Recep Tayyip Erdogan was defiant.

"Don't forget this: if they have dollars, we have our people, justice and God," he said. "We will come out of the economic war successfully."

The rhetoric did little to calm markets. The lira, which has dropped almost 40% against the dollar this year, resumed its slide as Erdogan spoke.


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