Fresh sanctions threat from U.S. knocks recovery of Turkish lira

Roman Schwartz
August 18, 2018

The crash comes amid the ongoing diplomatic row between the USA and Turkey over an American pastor alleged to have been involved in the Middle Eastern country's 2016 attempted coup.

Brunson, an evangelical preacher from North Carolina, is now under house arrest in Izmir.

The world's two largest economies are due to impose tariffs on billions of dollars of each other's goods on August 23, in addition to levies that took effect on July 6.

Brunson, who has been living in Turkey for more than two decades, was accused of helping supporters of the USA -based Fethullah Gülen who Turkish authorities say masterminded the 2016 coup attempt in which 250 people were killed.

According to the Middle East Eye, officials in Ankara are willing to concede to United States demands for the freedom of Andrew Brunson, an evangelical preacher accused of playing a role in the attempted coup there in 2016. "We'll see what happens". United States officials maintain there is no credible evidence against Brunson, and the Trump administration has negotiated for weeks to secure his release. Last year, it was reported the Eye received funding from Qatar, though it has denied this.

A Turkish court on Friday rejected Andrew Brunson's request to leave the country.

Analysts say Turkey is likely to seek a more dynamic economic relationship with China and Russian Federation, with whom ties have warmed considerably in recent years.

"There has been a flight to safety through the week that lifted both these currencies up and is keeping both of them stable", said Schamotta.

Easing worries over the fallout from the Turkish lira's recent slide also helped strengthen the euro against the dollar. Inflation is at a 14-year high, and looks to be on the brink of a major debt crisis.

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However, deep concerns remain about the potential for damage to the economy.

President Donald Trump last week ramped up his attack on Turkey by doubling US tariffs on Turkish aluminum and steel imports.

"There has been no sign that the central bank will be allowed to raise interest rates significantly and return rates to positive territory", said William Jackson of Capital Economics in a note to clients.

Earlier on Thursday, Treasury Secretary Steve Mnuchin hinted at more sanctions over Brunson, saying, "We have more that we are planning to do if they don't release him quickly".

Trump added: "We will pay nothing for the release of an innocent man, but we are cutting back on Turkey!"

Trump, before leaving the White House on Friday, denounced Turkey as a "problem for a long time" and said it made up a "phony" spying charge against Andrew Brunson.

"We have responded to (US sanctions) in accordance to World Trade Organisation rules and will continue to do so", Ms Pekcan told reporters on Friday.

On the first day Trump threatened Turkey with sanctions for the treatment of Brunson, Vice President Mike Pence gave a prayer at the Ministerial to Advance Religious Freedom in which he said "to believers across America, I say a pray for pastor Brunson".

Over 160,000 people, including some Americans, have been detained after the government charged them with helping orchestrate the same coup, according to the UN.

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