The Turkish lira fell sharply against the dollar on Friday, losing more than 18 percent of its value in one day – a deterioration in the monthly decline for the currency of Turkey.
What caused this sharp drop in the price of lira? There are many factors, many of which are related to economic policy Leader of Turkey Recep Tayyip Erdogan,
But on Friday there was another great element that aggravated the situation: tweet from President Trump.
At 8.47 am Eastern Time – 3:47 pm. in Turkey – Trump turned to Twitter to announce that he would double the sanctions on steel and aluminum against Turkey. This step occurred when Washington was in diplomatic confrontation with Ankara in connection with the detention of Turkey by an Evangelical pastor from North Carolina.
The detention of Andrew Brunson, who is brought to trial on charges of an unsuccessful coup in Turkey in 2016, caused a serious setback in relations between the two NATO allies. Last week, the US applied punitive sanctions against two members of the Turkish cabinet and warned about further measures.
This economic uncertainty has shaken the already shaky economy of Turkey, and the lira has fallen several times since the beginning of August.
On Friday, prior to Twram Trump, Erdogan tried to stop the sale by contacting Turkish citizens to exchange any dollars, euros or gold for lira to help the currency. "This is a national, internal battle," he told the crowd in the north-eastern city of Bayburt, according to Reuters, "This will be the answer of my people to those who waged an economic war against us."
Erdogan's words did little to convince investors. The price of the lyre significantly decreased immediately after his speech.
Many analysts rejected Erdogan's complaints about the "economic war" led by foreigners against Turkey, saying that they are basically a scapegoat for the shortcomings of Turkey's own economic policy.
But Stunt Trump's trick can change this. In his message on Twitter, the US president especially noted how the Turkish lira swiftly sank against our very strong dollar. He added: "Our relations with Turkey are not good yet!"
The Trump administration is not alien to use its economic power as a political weapon to defeat foreign powers. He stepped up sanctions against countries such as North Korea, Iran and Russia. In a number of countries, primarily in Iran and Russia, this led to a significant decrease in the value of their currency.
At the same time, the United States is waging an economic war against China through tariffs and other measures. On Friday, Trump's trick showed that in many cases political and economic factors overlap: Trump's decision to double the sanctions against Turkey was made possible by the key trade law, named in section 232, which gives the US president very broad powers on tariffs in cases of national security.