Economic turmoil hits Turkey, US bank stocks react

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The President said he had authorised higher tariffs on imports from Turkey, imposing duties of 20 percent on aluminium and 50 percent on steel.

The United States is the biggest destination for Turkish steel exports with 11% of the Turkish export volume.

State Department Spokesperson Heather Nauert told reporters on August 9 that the United States would define progress in relations with Turkey with Brunson's return to the United States.

Turkey is world's sixth-biggest steel producer, and eighth largest steel importer for the USA according to the International Trade Administration.

President Donald Trump administration announced that it would higher the tariffs on Turkish steel and aluminum over the detainment of American evangelical pastor Andrew Brunson, who was arrested in 2016.

Henri Barkey, a professor of International Relations at Lehigh University who follows Turkey closely and has been critical of its President, Recep Tayyip Erdogan, said the new tariffs are "an unnecessary escalation at a time when the decline of Turkish lira was already putting pressure on Turkey".

Erdogan appealed to Turks to exchange dollars and gold for Turkish lira to support the plunging currency.

The currency slid almost 8 percent in relation to the dollar to a record low of 6.59 shortly after Trump announced the increase on metals duties on Twitter.

Hoping to put pressure on the North Atlantic Treaty Organisation ally to free the pastor, the White House sanctioned two top Turkish government officials.

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He also urged Trump to recognize the 1915 Turkish slaughter and exile of 1.5 million Armenians as a genocide, which USA presidents have declined to do for decades.

Turkish newspaper Hurriyet and other media reports quote Erdogan as making the comment to a group of worshippers following traditional Muslim Friday prayers during a visit to the northern city of Bayburt. The first one was Erdogan gave a speech doubling down on his failed policies, saying once again all their problems were the result of an "economic war" being waged against Turkey.

Erdogan called on Turks to not be concerned about exchange rate movements, mockingly declaring "the dollar, the mollar will not cut our path".

One of the triggers of the turmoil has been a standoff with the US over a detained American pastor that Turkey, a North Atlantic Treaty Organisation ally, has put on trial for espionage and terror-related charges linked to a failed coup attempt in the country two years ago. "Don't heed them", Erdogan said.

"This is a domestic and national struggle", Erdoğan said, according to The Associated Press.

Turkey's embattled lira on Friday hit new record lows against the U.S. dollar and euro, losing over seven percent in value as strains with the United States showed no sign of abating and fears grew over the exposure of European banks.

New Finance Minister Berat Albayrak - Erdogan's son-in-law - acknowledged that the central bank's independence was critical for the economy, promising stronger budget discipline and a priority on structural reforms. Hard currency debt issued by Turkish banks suffered similar falls.

The Dow Jones Industrial Average had lost more than 270 points by 2:45 p.m. Friday, a 1 percent loss, while falling bank stocks dragged the S&P 500 index down roughly 0.9 percent.

Erdogan, a self-described "enemy of interest rates", wants cheap credit to fuel growth, but investors fear the economy is overheating.

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