The Turkish lira has suffered due to US retaliatory action.
President Tayyip Erdogan of Turkey, during his visit to New York to attend the United Nations General Assembly meetings, said a Turkish court will decide the fate of American pastor Andrew Brunson. The pastor was detained by Ankara on terrorism-related charges. This development has led relations between Turkey and the United States to new lows.
President Erdogan said whether the pastor will be released or not is a matter of the country's judiciary. He pointed out that a hearing has been scheduled on October 12 and politicians have no say on this matter, reiterating that Turkish courts are independent entities and not controlled by the government. If Brunson was found by the court to be guilty, the American could be sent to jail for as long as 35 years. Mike Pompeo, the United States Secretary of State, said on September 24 he hopes Ankara will be releasing the evangelical pastor.
The Brunson affair has hit Turkish-U.S. relations. President Donald Trump of the United States, angry at Turkey for Brunson's continued detention, has authorized his government to double duties for steel and aluminum sourced from Turkey. The new, steep import duties came into effect in August. The Europe-Asian nation also hit back by jacking up tariff on American cars, tobacco, and alcohol imports.
The Turkish lira, its currency, was also negatively affected. It lost almost 40 percent of value against U.S. Dollar. Investors are now skittish on the diplomatic war between the two countries. The Turkish President, however, is staying put. He said that there is absolutely no connection between Brunson and the travails of the lira. Erdogan added that the economic difficulties being faced by Ankara is being portrayed more than the reality. He assured that Turkey will win all these challenges using its own resources.
— Nadine Maenza (@nadinemaenza) September 19, 2018
The central bank of Turkey has already taken the damage control route. It upped the benchmark rate by a noticeable 625 basis points in September. This eased the pressure on the lira and assuaged investor concern on President Erdogan's influence on Turkish monetary policy. The president said he was against such a measure and added that the action proves the central bank of Turkey is an independent decision-making entity. Erdogan said that he hopes the central bank will be successful in its endeavors as higher rates lead to greater inflation and that was the reason he personally opposed such a step.