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Turkish lira dips again on USA sanctions warning

Turkish lira dips again on USA sanctions warning

The U.S.is threatening further sanctions against Turkey if it does not quickly release American pastor Andrew Brunson, who has been detained by the Turkish government for almost two years.

It's the latest blow to the country whose currency, the lira, has taken a battering amid concerns about fundamental economic problems and a diplomatic and trade dispute with the United States. Erdogan has cast the tariffs, and the lira's sell-off, as an "economic war" against Turkey.

U.S. President Donald Trump is condemning the detention of an American pastor in Turkey and warned that "we are not going to take it sitting down". In a telephone call on Friday, Finance Minister Berat Albayrak and his French counterpart Bruno Le Maire discussed US sanctions against Turkey and cooperation between their countries, Albayrak's ministry said.

A Turkish court on Friday turned down another appeal to free the pastor in the third such rejection, his lawyer said. Many financial experts say Turkey should raise interest rates to reduce inflation and attract investment, but Erdogan has so far opposed a move he says would curb growth.

Speaking in Washington, White House spokeswoman Sarah Sanders made clear the United States had no plan to remove the steel tariffs if Brunson were released though she said it could remove sanctions imposed on two senior Turkish officials.

It said: "The downgrade reflects our expectation that the extreme volatility of the Turkish lira and the resulting projected sharp balance of payments adjustment will undermine Turkey's economy".

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Last Wednesday, in retaliation, Turkey increased tariffs on several USA -origin products, including alcohol and tobacco products and cars.

The United States sanctioned Justice Minister Abdulhamit Gul and Interior Minister Suleyman Soylu, blaming both for being involved Brunson's arrest and detention.

Turkey is struggling to stabilize its currency after it plunged to a record low in a crisis that spurred fears of bankruptcies and a spillover effect in other emerging markets if Turkish firms can't pay back high foreign debt. The feud over Brunson, who was detained in October 2016, has added to the jitters over an economy that grew quickly, with the help of heavy borrowing, in past years. "Tax rates on imports of some products have been increased on a reciprocal basis against the US administration's deliberate attacks on our economy", the country's vice president, Fuat Oktay, said in a pair of tweets. "Would the amount of Turkey's debts decrease?" However, much of the ill will shared by Turkey and the US stems not only from the back-and-forth on tariffs, but also from a diplomatic dust-up centered on two men of "faith".

Erdogan has remained defiant, urging Turks to sell their gold and dollars for lira. At the congress, President Erdogan was re-elected as head of the party. Brunson is accused of backing a 2016 coup attempt against Mr Erdogan, which Brunson denies.

Turkey has repeatedly criticized the USA for not condemning the coup attempt two years ago.

The court in the western city of Izmir ruled that Brunson, who faces 35 years in jail if convicted, would remain under house arrest, his lawyer Cem Halavurt told AFP.


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