U.S. threatens new sanctions, Turkey vows to respond

Mae Love
August 17, 2018

On Thursday, US Treasury Secretary Steven Mnuchin said: "We have more that we are planning to do if they don't release him [Mr Brunson] quickly".

A slide in the value of the Turkish lira turned into a rout last Friday when US President Donald Trump tweeted that his administration was doubling aluminium and steel tariffs for Turkey.

Trump later tweeted that the United States "will pay nothing" for the release "but we are cutting back on Turkey!".

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 trouble. He demanded Brunson's release, saying "they can't take our people".

A Turkish court on Wednesday rejected a new appeal to free USA pastor Andrew Brunson, whose detention has sparked a major row between Turkey and the United States, local media reported.

Additional US sanctions against Turkey could be imposed if Mr Brunson is not freed.

He also urged Brunson to serve as a "great patriot hostage" while he is jailed and criticized Turkey for "holding our wonderful Christian Pastor".

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"Turkey - they have not proven to be a good friend".

The court's decision came as Turkey and the United States exchanged new threats of sanctions, keeping alive a diplomatic and financial crisis that is threatening the economic stability of the North Atlantic Treaty Organisation country.

Following the Qatar news, the lira firmed briefly to 5.8699 from 6.04 to the dollar, before easing back to 6.0500 by 1658 GMT.

The United States was the fourth-largest source of imports to Turkey a year ago, accounting for $12 billion of imports, according to International Monetary Fund statistics. Turkish sovereign dollar bonds fell, while the cost of insuring exposure to Turkish debt rose.

Albayrak, a 40-year-old former company executive with a doctorate in finance, said Turkey would not hesitate to provide support to the banking sector.

Erdogan has moved to shore up alliances in Europe and the Middle East, easing pressure on the battered lira, as the standoff with the USA has deepened. Berat Albayrak, the son-in-law of president Recep Tayyip Erdoğan, pledged to protect beleaguered local banks and cut public spending to prevent the country defaulting on its loans. The lira's sharp decline has sparked fears in the worldwide community of a Turkish economic crisis.

The growing tensions between Washington and Ankara have sent the Turkish currency tumbling to historic lows. Central bank data showed foreign currency deposits held by local investors rose to $159.9 billion in the week to August 10, from $158.6 billion a week earlier.

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