Asian, European stocks tumble as Turkish lira sinks further

Asian, European stocks tumble as Turkish lira sinks further
The Turkish lira dropped eight percent on Monday, days after it lost 16 percent of its value when Washington doubled steel and aluminum tariffs.
2 min read
13 August, 2018
Erdogan says Turkey is under attack [Getty]

Asian and European markets tumbled Monday as the Turkish lira dropped eight percent against the dollar, with fears it could spill over to the global economy. 

The lira's sharp drop sparked a sell-off in Europe and New York at the end of last week, with safe haven assets including the Japanese yen and Swiss franc rallying. 

The lira hit a record low of 7.24 to the dollar after the country's finance minister said Ankara was planning to roll out an "action plan" on Monday in response to the crisis. 

A dispute between NATO allies Turkey and the US - which reached new intensity over the detention of an American pastor - has hammered the lira and also raised questions over the future partnership between Washington and Ankara.

It caused global market jitters last week as investors fretted over potential economic contagion from Turkey, particularly to European banks.

The already embattled Turkish lira tumbled some 16 percent against the dollar on Friday as US President Donald Trump said he had doubled steel and aluminium tariffs on Turkey.

Erdogan appeared unworried by the punitive measures imposed by the US, saying Turkey could turn to other partners and again terming the crisis an "economic war".

He indicated that the entire alliance between Turkey - which joined NATO in 1952 with strong American backing - and the United States was at stake.

"You dare to sacrifice 81-million (in) Turkey for a priest who is linked to terror groups?"

The American pastor Andrew Brunson has been held since October 2016 on terror and espionage charges, and if convicted, could face a jail term of 35 years.

Trump has described his detention as a "total disgrace" and urged Erdogan to free him immediately.

A delegation led by Turkish Deputy Foreign Minister Sedat Onal failed to secure a deal last Wednesday in talks in Washington on a number of issues including Brunson.

Erdogan confirmed media reports that Washington gave Onal's delegation a deadline of 6pm last Wednesday for the release of Brunson "otherwise the sanctions will begin".

The Brunson case is just one of many bones of contention between Turkey and the US, ranging from Syria to Ankara's increasingly cosy relationship with Moscow. 

Agencies contributed to this report.

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