Trump renews criticism of Turkey over United States pastor

Christian Charisius  Reuters

Christian Charisius Reuters

On Thursday, Trump said Turkey had "taken advantage of the United States for many years" and referred to Brunson as a "great patriot" who was being held "hostage".

S&P said: "Despite heightened economic risks, we believe the policy response from Turkey's monetary and fiscal authorities has so far been limited".

Relations between Turkey and the U.S. are at a low point over the detention of Andrew Brunson, whom Turkish President Recep Tayyip Erdogan's government accuses of being involved in an attempted coup in 2016.

The Turkish government has also complained about what it calls us support for Kurdish rebel groups fighting in northern Syria, and it has condemned the USA refusal to extradite the Pennsylvania-based Islamic cleric Fethullah Gulen, who Turkey has accused of masterminding the 2016 coup attempt.

The lira has lost almost 40 per cent against the U.S. dollar this year, driven by worries over Mr Erdogan's growing control over the economy and his repeated calls for lower interest rates despite high inflation.

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At 12:03 ET the currency stood at 6.0450 to the dollar, 4 percent weaker.

President Donald Trump doubled tariffs on Turkish metals exports to the United States last week prompting Turkey, which says it will not bow to threats, to raise tariffs on USA cars, alcohol and tobacco by the same amount on Wednesday.

"There has been no improvement in relations with the USA and additional sanctions may be on the horizon", said William Jackson of Capital Economics in a note to clients, adding that the lira could see a downward trend in 2019 and beyond.

During the cabinet meeting, President Donald Trump took a shot at Turkey, which is a long-time USA ally and fellow North Atlantic Treaty Organisation member.

Turkey on Friday vowed to respond if the United States followed through on its threat to levy further sanctions if it does not release the American pastor being held on terror charges.

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Moody's likewise cited the weakening lira and downgraded Turkey's debt to Ba3, as well as "heightened concerns" for the central bank's independence and "the lack of a clear and credible plan" to address the causes of recent financial troubles.

Trump added the pastor is a "very innocent man" and "we got somebody out for him - he needed help getting somebody out of some place".

ENERGY, BANKS The Turkish banking watchdog has taken steps to stabilise the currency, limiting futures transactions for offshore investors and lowering limits on swap transactions.

"Overall, the data indicates that consumers have little tolerance for overshooting inflation targets, and to the benefit of the Fed, interest rates now play a more decisive role in purchase decisions", he said.

The lira has clawed back some ground over the last two days - after losing nearly a quarter of its value on Friday and Monday - but economists are warning that Turkey must urgently address its economic imbalances to avoid more troubles ahead. The embattled nation has also seen generosity from Qatar with the Gulf nation pledging $15 billion worth of investment on Wednesday.

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Meanwhile, Turkish courts have moved to defuse other legal cases that have irritated relations with the EU.

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