Turkish president Erdogan rails against United States tariffs in media offensive

At midday: Turkey turmoil rocks world stock markets

At midday: Turkey turmoil rocks world stock markets

President Recep Tayyip Erdogan has accused the United States of orchestrating a global economic crisis and trying to "bring Turkey to its knees through threats over a pastor" as relations between the North Atlantic Treaty Organisation allies neared a breaking point this weekend. The U.S. exported $9.75 billion worth of goods-mostly cotton, scrap iron, steel, civilian aircraft parts, coal, and petroleum gases-to Turkey, and imported $9.42 billion worth of goods from them.

Mr Erdogan has linked Gulen's fate to that of American Christian pastor Andrew Brunson, who is on trial in Turkey on terrorism charges for allegedly supporting a group that Ankara blames for the failed coup.

Turkey also warned there would be retaliation against the US' imposition of the tariffs. There are already ample signs that Trump's aggressive anti-trade rhetoric is dampening global economic activity as trade wars heat up and even risk morphing into currency wars. Aluminum will now be 20% and Steel 50%.

Erdogan has cast the recent slide in the lira as a war and without naming countries said supporters of a failed military coup two years ago, which Ankara says was organized by a US -based Muslim cleric, were attacking Turkey in new ways since his re-election two months ago.

The US has demanded the release of Andrew Brunson and on Friday doubled tariffs on steel and aluminum imports. "Making a speech like Albayrak's in the midst of a currency free fall without a single concrete measure shows utter lack of comprehension about what's happening and what's required", tweeted Harvard economist Dani Rodrik.

Turkey entered a full-blown financial meltdown on Friday, after President Recep Tayyip Erdogan declared his refusal to bow to U.S. political demands and market pressures.

Markets are deeply concerned over the direction of domestic economic policy under Erdogan with inflation at almost 16 percent but the central bank reluctant to raise rates in response.

Time to hand over to the technocrats and the central bank for a whacking great interest rate hike you might think. But since adopting increased powers, Mr Erdogan appears to have greater control over the bank as well.

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Turkish President Recep Tayyip Erdogan said at a rally in the city of Rize on Saturday that Ankara is ready to trade with its partners in national currencies.

"If there is anyone who has dollars or gold under their pillows, they should go exchange it for liras at our banks", he said during an address to supporters. "This is a domestic and national struggle". Immediately give these to the banks and convert to Turkish lira and by doing this, we fight this war of independence and the future. But Erdogan urged Turks not to be panicked by the currency crisis, saying: "If they have the dollar, we have Allah". These looming payments are one of the main reasons for the government's fragility, because a weaker lira makes that debt more expensive to pay off.

Coupled with an inflation rate of almost 16 percent, that could cause severe damage to the local economy.

Foreign investors could be spooked and try to pull their money out, reinforcing the currency drop and potentially leading to financial instability.

Turkey's woes also shook world markets, pushing down stock indexes.

An index of regional banking shares slid 3.7 per cent while the pan-European STOXX 600 index fell 1.2 per cent.

The euro sagged to a 13-month low against the dollar on concerns that European banks operating in Turkey could suffer losses.

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