- The Turkish lira fell as much as 20% versus the dollar Friday after President Donald Trump said he would double the rates of tariffs on Turkish steel and aluminum.
- Washington recently imposed sanctions on Ankara over a detained American pastor.
- Turkish President Recep Tayyip Erdogan called on citizens to convert other currencies and gold into lira.
- Watch the lira trade in real time here.
Turkey's currency plunged to fresh all-time lows against the dollar Friday after President Donald Trump announced in a tweet that he would double tariffs on Turkish aluminum to 20% and on Turkish steel to 50%.
"I have just authorized a doubling of Tariffs on Steel and Aluminum with respect to Turkey as their currency, the Turkish Lira, slides rapidly downward against our very strong Dollar!" the president wrote on Twitter. "Our relations with Turkey are not good at this time!"
The lira dropped as much as 20% against the dollar, its steepest daily drop since at least 2001. It was already one of the worst-performing currencies this year, but a deepening rift between Ankara and Washington has accelerated the sell-off.
A Turkish delegation returned from a meeting with Trump administration officials in Washington on Thursday with no apparent progress on a conflict over an American pastor who has been detained in Turkey for nearly two years.
Earlier this month, the Trump administration announced sanctions against Turkey for failing to release Andrew Brunson, a 50-year-old evangelical pastor who was arrested in 2016 on suspicion of aiding a failed military coup, claims the pastor denies. The sanctions target Turkey's minister of justice and minister of the interior, whom the White House said played leading roles in the arrest and detention of Brunson.
"It is astonishing that no matter how punished the Lira looks, traders are showing absolutely no indication that they are finished with pricing in 'bad news' into the market," Jameel Ahmad, the head of currency strategy and market research at FXTM, said.
During a speech in the Black Sea city of Rize overnight, President Recep Tayyip Erdogan called on citizens to exchange hard currencies and gold for the lira. He said the country was facing an "economic war" and blamed the sell-off on credit-ratings agencies and a shadowy "interest-rate lobby," according to Reuters.
Erdogan is a self-proclaimed enemy of interest rates and has pushed for unorthodox policies like cutting borrowing costs in the face of accelerating inflation. He had indicated plans to wield more influence over the country's central bank in the run-up to his June reelection.
Concerns about the lira seem to already be spreading to other currencies, analysts say, including the pound and the euro.
"The issue that global investors now need to take into consideration is that the recipe for a currency crisis in Turkey is now presenting a risk of a contagion knock-on effect across other markets," Ahmad said.
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