European banks plummet amid fears of exposure to Turkish debt

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On Friday, President Trump announced that he will double America's metal tariffs on Turkey - despite the fact that he has no good reason for doing so.

Turkey has accused Andrew Craig Brunson of spying and "committing crimes on behalf of terror groups without being a member".

A delegation of Turkish officials held discussions with their counterparts in Washington this week but there was no sign of a breakthrough. All week, the lira has been under pressure, which accelerated with the failure of diplomatic talks in Washington this week.

This means that we can expect a prolonged mixed sentiment towards global stocks, low attraction towards emerging market currencies but a stronger dollar and Japanese yen.

The value of Turkey's currency has nosedived since January and has lost more than 34% of its value against the dollar.

"We will not lose the economic war", he said.

What's happening to Turkey's currency right now?

Tensions between the North Atlantic Treaty Organisation allies also flared in May 2017 after Erdoğan's personal security forces attacked demonstrators protesting his visit to the Turkish Embassy in Washington, D.C.

"Some countries have engaged in behaviour that protects coup plotters and knows no laws or justice", he said.

He added: "Relations with countries who behave like this have reached a point beyond salvaging". The U.S. responded by filing a complaint against the country with the World Trade Organization. He subscribes to the completely backward theory that lower interest rates cause lower inflation, which, now that he's given himself the power to pick the country's top central banker and made his son-in-law the finance minister, is actually being put to the test. Spoiler alert: It is not going well.

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Last week, he called on Turks to convert their foreign currency and gold into Turkish lira to help the currency.

The Turkish unit of currency, the lira, has been dropping due both to the policies of Turkish President Recep Tayyip Erdogan and that country's souring relationship with the United States.

"You will not make money at the expense of Turkish people".

For a start, investors are anxious that Turkish companies that borrowed heavily to profit from a construction boom may struggle to repay loans in dollars and euros, as the weakened lira means there is now more to pay back.

Paul Greer at Fidelity International said dramatic interventions were now needed as Turkey faced a "downward spiral" of investor confidence.

Erdogan on Friday once again urged Turks to exchange gold and dollars into lira to stop the currency from plunging. If it fell much further, it might push a lot of Turkish banks and businesses that had borrowed in dollars into bankruptcy - assuming they did not get bailed out first.

At many US lenders, "their exposure to any of these countries is fairly minimal", said Marty Mosby, an analyst at Vining Sparks. It pegged its total credit exposure to Turkey at $2.53 billion at the end of June, nearly entirely with non-sovereign counterparties or borrowers, and said it had $2.05 billion of Turkish collateral.

The Turkish president his indicated possible support from Beijing and Moscow, but analysts are skeptical, given the scale of support the Turkish economy needs.

Without naming countries, Erdogan said supporters of a failed military coup two years ago, which Ankara says was organised by a USA -based Muslim cleric, were attacking Turkey in new ways since his re-election two months ago.

State Department Spokesperson Heather Nauert told reporters on August 9 that the United States would define progress in relations with Turkey with Brunson's return to the United States. "It may be not the best, but it is an option".