Turkish lira drops after Trump says Erdoğan should abandon S-400s

Turkey’s lira fell against the dollar on Thursday after U.S. President Donald Trump said President Recep Tayyip Erdoğan should abandon a deal with Russia to buy S-400 air defence missiles.

The lira declined by 0.6 percent to 5.77 per dollar at 11:53 a.m. in Istanbul, extending losses this year to 8.3 percent.

Trump said the S-400 agreement was a very serious challenge to relations between the United States and Turkey. He spoke after meeting Erdoğan at the White House on Wednesday.

Trump Erdoğan meeting

Relations between Washington and Ankara have become severely strained over Turkey’s warming ties with Moscow and its military incursion into Syria in October to fight Kurds allied with the United States. U.S. prosecutors are also investigating Turkey’s state-run Halkbank on charges of conspiring to evade U.S. economic sanctions on Iran.

Shares of Halkbank fell by 3.9 percent to 5.71 liras on the Istanbul Stock Exchange. Prosecutors in Manhattan opened the case against the firm last month after Erdoğan ordered Turkish troops into northern Syria against U.S. wishes.

Turkey endured a currency crisis last year after Trump imposed limited economic sanctions on the country for the detention of a U.S. pastor on terrorism charges. A deep economic recession ensued. The lira lost almost 30 percent of its value against the dollar during 2018.

The lira fell on Thursday despite data showing that Turkey’s industrial output increased for the first time in 13 months. Production gained an annual 3.4 percent in September, the Turkish Statistical Institute said on its website.