Erdogan tells Turks to buy plunging lira as Trump turns the screws

Turkey to reveal 'new economic model' on Friday

Trump tweeted that the latest tariff decision came as Turkey's currency, the lira, "slides rapidly downward against our very strong Dollar".

Washington has demanded the pastor's release and last month imposed financial sanctions on two Turkish ministers.

"It's pretty remarkable how far the Trump administration is willing to go - putting at jeopardy the relationship with a North Atlantic Treaty Organisation ally over a preacher".

Trump tweeted on Friday that he would be doubling existing tariffs on steel and aluminum imports from Turkey.

The Turkish lira plunged 20% Friday after President Trump announced he would be doubling the import tariff on metal produced in that country, sending Turkey's currency to a record low against the United States dollar.

Investors piled into "safe" government debt, with German yields hitting three-week lows and the yield on the benchmark USA 10-year Treasury note falling to 2.88822 percent.

USA sanctions and president Erdogan's tightening control over monetary policy are driving the fall, which sent the lira to an all-time low of above 6 to the dollar this morning.

"This is a domestic and national struggle".

The dollar rose as exposure to Turkey could impact European banks and spark a domino effect throughout Europe as people begin to pull out of those banks and into the USA, said Gregan Anderson, macroeconomic strategist at brokerage Bulltick LLC.

In this file photo taken on July 11, 2018, US President Donald Trump (L) speaks with Turkey's President Recep Tayyip Erdogan (R) as they arrive for a North Atlantic Treaty Organisation summit at North Atlantic Treaty Organisation headquarters in Brussels.

The move against President Recep Tayyip Erdogan's government also highlights the disconnect between Turkey and the U.S.as they fail to negotiate their way out of an array of conflicts. "It is a national fight", he told a crowd in the northeastern city of Bayburt.

Turkey's currency sank to record lows on Friday amid panic about the country's economic health and souring relations with the United States.

The lira hit a record low of 6.24 per dollar on Friday, before recovering to 5.96, down more than 7 per cent on the day.

Erdogan also Friday held telephone talks with Russian President Vladimir Putin, discussing economic and trade issues as well as the Syria crisis, the Turkish presidency said.

Turkish President Tayyip Erdogan makes a speech during a meeting of his ruling AK Party in Ankara, Turkey August 4, 2018.

The president has declared that American importers' reliance on foreign metals poses a national security risk to the United States, and he also has increased the cost of these imports on Japan, Turkey and members of the European Union, the paper reported.

Independent analysts argue the central bank should instead raise rates to tame inflation and support the currency. "Don't heed them", Erdogan said.

Global markets are in turmoil on Friday, with a historic plunge in the Turkish lira at the center of the chaos.

Q: Why is Turkey's currency so weak?

He subscribes to the completely backward theory that lower interest rates cause lower inflation, which, now that he's given himself the power to pick the country's top central banker and made his son-in-law the finance minister, is actually being put to the test. Spoiler alert: It is not going well.

Coupled with an inflation rate of almost 16 percent, that could cause a lot of damage to the local economy. The tech-heavy Nasdaq composite was down 83 points, or 1.1%, poised to end an eight-day winning streak.

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