Turkey lira slumps to record lows over US sanctions

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ISTANBUL – Turkey’s lira traded at just under 5 to the dollar on Thursday after the United States imposed sanctions on two of President Tayyip Erdogan’s ministers over the trial of an American pastor accused of backing a 2016 coup attempt in Turkey.

The currency slumped to a record low of 5.015 on Wednesday, when the White House announced sanctions against Justice Minister Abdulhamit Gul and Interior Minister Suleyman Soylu over the country’s detention of Andrew Brunson.

The United States has blamed both for being involved in Brunson’s arrest and detention.

The lira was at 4.9870 to the dollar at 0610 GMT. It has lost a fifth of its value this year, battered by rising inflation and concerns over the central bank’s independence in the face of Erdogan’s call for lower interest rates.

Diplomatic disagreements with the United States, a NATO ally and a major trading partner, have long weighed on sentiment and the latest move by Washington exacerbated the tension.

Turkey’s Foreign Ministry called Washington’s action a “hostile stance” and said it would retaliate.

“We call on the U.S. administration to walk back from this wrong decision,” it said in a statement on Wednesday.

Relations between the United States and Turkey have plummeted over Brunson, who was in custody for 21 months in a Turkish prison until he was transferred to house arrest last week.

On Tuesday a court rejected Brunson’s appeal to be released from house arrest during his trial on terrorism charges. Brunson, who has lived in Turkey for more than two decades, faces up to 35 years in jail if found guilty of the charges, which he denies.

(Reporting by David Dolan; Editing by Dominic Evans) (Reuters)

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