U.S. threatens more sanctions on Turkey over detained pastor

Darnell Taylor
August 17, 2018

The Turkish lira weakened 4 percent against the dollar on Friday as investors fretted about a U.S warning that Turkey should expect more economic sanctions unless it hands over detained American pastor Andrew Brunson.

USA stocks suffered their worst day in seven weeks after the move, and the lira gained 7 percent against the dollar.

A restaurant in Istanbul is offering free fish and bread to anyone who converts at least $100 to lira, in a bid to support Turkish President Recep Tayyip Erdogan who called on Turks to sell their gold and hard currency as part of a "national battle" against economic enemies. "Qatar has pledged United States dollars 15 billion of direct investments in Turkey", presidential spokesman Ibrahim Kalin wrote on Twitter yesterday.

Finance Minister Berat Albayrak assured worldwide investors on Thursday that Turkey would emerge stronger from its currency crisis, insisting the country's banks were healthy and signalling it could ride out a row with the United States.

Last week the USA doubled tariffs on aluminium and steel imports from Turkey, during a dispute over Turkey's detention of an American pastor on security charges that the U.S. views as baseless.

Erdogan also spoke with French President Emmanuel Macron, a day after talks with German Chancellor Angela Merkel and a $15 billion pledge of support from Qatar.

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Treasury Secretary Steven Mnuchin suggested during a cabinet meeting on Thursday that the next spiral of tit-for-tat sanctions was coming soon, deepening a spat that has rattled financial markets, if Andrew Brunson is not released by Turkey.

"We have put sanctions on several of their cabinet members", said Mnuchin.

After he finished speaking, the lira was little changed from beforehand, meaning it remained down around 34pc against the dollar this year.

Optimism about better relations with the European Union after a Turkish court released two Greek soldiers pending trial and a banking watchdog's step to limit foreign exchange swap transactions have also helped the lira.

China isn't the only country the U.S. has a rocky relationship with - Turkey is causing a few headaches for U.S. leaders as well. Two sources with knowledge told CNN that the move stemmed from Trump's frustration over Brunson's detention. If they side with Turkey, they run the risk of antagonizing US President Donald Trump. On Aug. 14, he said Turkey would boycott USA electronic products.

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