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Turkey's currency, the Lira, was in freefall Friday - losing 20% of its value against the dollar at one point and hitting record lows after President Trump threatened to increase tariffs on the country. President Erdogan encouraged citizens to help by converting gold and USD into Lira - but the plea has had the opposite effect. The brewing financial crisis in Turkey was viewed by global markets as a possible contagion to neighboring economies, including the EU.
The plunge in the lira raised doubts about Asian and European banks that have invested in the country, and it contributed to declines in stock markets around the world. As with the financial crisis set off by Greece in 2010, Friday’s events were the latest example of how troubles in a nation with a midsize economy but world-class problems could threaten financial stability further afield. “In financial markets everything is interlinked,” said Bart Hordijk, a market analyst in Amsterdam at Monex Europe, a foreign exchange firm. “You don’t know if one bank has huge exposure to the Turkish lira.”
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