Economic turmoil hits Turkey, US bank stocks react

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In a separate opinion piece in the pro-government newspaper Daily Sabah, Erdogan's spokesman Ibrahim Kalin said Turkey's efforts to solve the crisis with diplomatic methods had been dismissed by the Trump administration, warning that "the USA runs the risk of losing Turkey" as an ally.

Stocks in the US and Europe skidded Friday as investors anxious about the financial stability of Turkey and how it might affect the global banking system.

Brunson was arrested in October 2016 on charges of being an American spy and terrorist complicit in the failed coup attempt against Erdogan in the summer of 2016.

It was down roughly 0.5 percent to trade at $1.146 on Friday morning.

Mr Trump intensified his spat with Turkey by imposing the higher tariffs, putting unprecedented economic pressure on a North Atlantic Treaty Organisation ally and deepening turmoil in Turkish financial markets.

Trump said the tariffs on aluminum imports would be increased to 20 percent and those on steel to 50 percent as the Turkish lira "slides rapidly downward against our very strong Dollar!"

He indicated Turkey's relationship with Washington was imperiled.

Turkey is now under a 25 percent tariff on imported steel and 10 percent on aluminum, which went into effect in March.

Relations are also tense because of new U.S.

Trump's tweet sent the already-depreciating Turkish lira into free fall, and appeared to bring other developing market currencies - and the euro - down with it. Since then Trump and his vice president Mike Pence have repeatedly called for his release while Ankara said the decision was up to the courts.

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Turkey vowed retaliation "without delay" and warned the move would further harm relations between the two allies.

Erdoğan said that the US had set a deadline of last Wednesday for Brunson's release, threatening Turkey with sanctions if it did not comply with USA wishes. He claims higher rates lead to higher inflation - the opposite of what standard economic theory says.

As a result he's pushed Turkey's central bank to keep interest rates low, threatening its independence and preventing it from shoring up the lira.

After winning a June election with revamped powers, he tightened his control over the central bank and appointed his son-in-law Berat Albayrak to head a newly-empowered finance ministry. That sent the lira down even further.

"Change the euros, the dollars and the gold that you are keeping beneath your pillows into lira at our banks".

"This is a national, domestic battle".

Turkey wants the USA to extradite cleric Fethullah Gulen, a Pennsylvania-based cleric who Turkish authorities say masterminded the coup attempt in which 250 people were killed.

On Thursday, Mr Erdogan said: "If they have their dollar, we have the people, we have Allah".

Earlier today, Erdogan described the Turkish economy as "under attack", and urged Turks to buy the lira.

"Do not worry!" He said Turkey was not afraid of "threats" and added Turkey had "alternatives" for economic cooperation in many places "from Iran, to Russian Federation, to China and some European countries".

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