Turkey's Albayrak rolls out new economic plan, but lira slide continues
Turkey's finance minister rolled out the government's new economic plan on Friday, promising central bank independence and tighter budget discipline, but giving few details to reassure investors and stem a widening currency crisis.
In a nearly hour-long presentation to business leaders in Istanbul, Berat Albayrak promised structural reform, economic rebalancing and "sustainable and healthy growth", without spelling out precisely what the government planned to accomplish, or how it would get there.
His comments gave no support to the free-falling lira, now in the throes of a full-blown currency crisis. The sell-off accelerated after U.S. President Donald Trump said Washington would double down on steel and aluminum sanctions against Turkey.
The lira fell more than 20 percent at one point, its biggest one day drop since Turkey adopted a floating-currency regime in 2001.
Albayrak, President Tayyip Erdogan's son-in-law, said that the government did not consider inflation and growth to be alternatives to each other, comments likely to further unnerve investors.
Erdogan's grip over monetary policy, as well as the widening rift with the United States, has sparked the currency crisis. The president, a self-described "enemy of interest rates", wants to see lower borrowing costs to keep credit flowing to the construction sector.
The central bank's reluctance to hike interest rates to tackle double-digit inflation has led to concerns about its independence.
But it is the tensions with the United States that have weighed heavily in recent days.
Trump said on Friday he had authorized higher tariffs on imports from Turkey, imposing a 20 percent duty on aluminum and 50 percent one on steel, as tensions mount over Ankara's detention of an evangelical pastor and other diplomatic issues.
Securing the release of pastor Andrew Brunson, arrested in 2016, is a top priority for the United States, and it is also tussling with Turkey over the detention of three locally employed U.S. consular staff, trade issues and differences over Syria. (Reporting by Humeyra Pamuk and Ezgi Erkoyun; Writing by David Dolan Editing by Dominic Evans)
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