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Lira slips amid US' call to revoke preferential trade treatment to Turkey

Devdiscourse News Desk | Updated: 17-05-2019 20:10 IST | Created: 17-05-2019 14:07 IST
Lira slips amid US' call to revoke preferential trade treatment to Turkey
The White House said on Thursday it was terminating as of Friday Turkey's eligibility to participate in the Generalized System of Preferences (GSP) programme, based on its level of economic development. Image Credit: Flickr

The Turkish lira weakened slightly on Friday as investors weighed up a U.S. decision to end Turkey's preferential trade treatment that allowed some exports to enter the United States duty-free while halving tariffs on Turkish steel imports. A treasury desk trader at one bank said concerns about Turkey's outlook were adding to pressure on the lira generated by the dollar's underlying strength, while the U.S. decisions would have a mixed impact.

"The U.S. decisions were negatively priced but the decisions do not have a clear economic impact," he said. "Markets will monitor political statements regarding relations between the two countries, given the risks that they have recently entailed." The lira stood at 6.0595 against the dollar at 0822 GMT, easing from a close of 6.0475 on Thursday.

The White House said on Thursday it was terminating as of Friday Turkey's eligibility to participate in the Generalized System of Preferences (GSP) programme, based on its level of economic development. The United States imported $1.66 billion in 2017 from Turkey under the GSP, or 17.7 per cent of total imports from Turkey, according to the U.S. Trade Representative website. Imports include vehicles and vehicle parts, jewellery and precious metals.

It had begun reviewing the NATO ally's status in the programme last August when the two countries were embroiled in a diplomatic row. Ankara had been hopeful that Washington would not go ahead with the move, saying it ran contrary to the two countries' $75 billion bilateral trade target. The United States also said it halved its tariffs on imports of Turkish steel to 25%. During last year's spat, President Donald Trump imposed higher steel tariffs to put pressure on Turkey to release an American pastor detained on terrorism charges. The pastor was released last October.

The row was a key factor in a currency crisis which wiped nearly 30 per cent off the lira's value last year. Ties remain tense over disagreements ranging from Ankara's planned purchase of a Russian missile system to diverging interests in Syria, and the lira has shed some 15 per cent this year.


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