Qatar’s emir travels to crisis-hit Turkey in show of support

Daniel Fowler
August 15, 2018

The emir of wealthy Qatar flew to Turkey on Wednesday to meet close ally President Recep Tayyip Erdogan in an apparent show of support as Ankara grapples with a currency crisis.

The Turkish currency has lost almost 40 percent against the dollar this year, driven by worries over Erdogan's growing influence on the economy and his repeated calls for lower interest rates despite high inflation.

Turkish President Tayyip Erdogan attends a news conference in Ankara, Turkey, Aug. 14, 2018.

His case now lies at the heart of a diplomatic crisis between Turkey and the United States that has sent Turkish lira into free-fall.

The sanctions are believed to have further exacerbated economic turmoil in Turkey, which some believe has its roots in misguided economic policies of the government in recent years.

The lira was trading at 6.3 to the dollar, a gain in value on the day of 0.8 percent.

Earlier on Wednesday, Erdogan spoke on the phone with German Chancellor Angela Merkel, the Turkish presidency.

But many analysts say the only way for the authorities to show they are really serious about tackling Turkey´s economic problems - which include inflation approaching some 16 percent - would be a sharp rate hike.

It appears that the move was triggered by the introduction of new rules by the BDDK - Turkey's banking watchdog - created to stop investors betting against domestic assets.

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Turkey has retaliated by announcing Wednesday that it will increase tariffs on certain USA products, including on cars, rice, alcohol, coal and cosmetics. The currency's climb followed retaliatory tariffs by Ankara against U.S. goods including rice, coal and cars.

"Tax rates on imports of some products have been increased on a reciprocal basis against the USA administration's deliberate attacks on our economy", the country's vice president, Fuat Oktay, said in a pair of tweets.

American pastor Andrew Brunson is being held on terrorism charges in Turkey, facing up to 35 years in prison for his alleged role in a failed coup in 2016.

The United States was the fourth largest source of imports to Turkey past year, accounting for $12 billion of imports, according to International Monetary Fund statistics.

The United States and Turkey also have diverging interests over Syria, which is enmeshed in a protracted civil war.

Washington warned more economic pressures may be in store for Turkey if it refuses to release Brunson, a White House official said on Tuesday.

Erdogan also renewed a call for Turks to convert their dollars into the lira, to help strengthen the currency.

The court in the western city of Izmir rejected the appeal and ruled that Brunson will remain under house arrest, the state television TRT reported. "The tariffs are specific to national security", she said.

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