Lira rallies after Turkey raises tariffs on US imports

President Erdogan has accused the US of seeking to "stab [Turkey] in the back"

Turkey's move to increase tariffs on US imports has helped boost its weakened currency.

A decree signed by President Recep Tayyip Erdogan raised the tariffs on cars to 120%, on alcoholic drinks to 140% and on leaf tobacco to 60%.

The US doubled tariffs last week over Turkey's refusal to free a US pastor who is imprisoned there.

The lira rose 3%, also helped by measures aimed at deterring foreign investors speculating on the lira.

Despite the rise, Turkey's currency has lost almost a third of its value against the dollar since January, pushing up the price of everyday items and raising fears that its weakness could infect other emerging market currencies.

Explaining the new tariffs, Turkish Vice-President Fuat Oktay said the rises were ordered "within the framework of reciprocity in retaliation for the conscious attacks on our economy by the US administration".

Tariffs were also increased on cosmetics, rice and coal. Turkey had previously said it would boycott US electronic products.

Turkish Trade Minister Ruhsar Pekcan told the state run Anadolu news agency that the doubling of tariffs on some imported US products would amount to $533m.

Inflation

The lira had plunged to record lows on Monday, but has since clawed back some of its losses, not only after the retaliation on tariffs, but also after the Turkish Central Bank announced banks would be given help to keep money moving around the system.

Measures to restrict the amount of currency that can be exchanged with foreign banks were also said to be boosting the currency.

President Erdogan said earlier this week that Turkey should not "give in to the enemy" by investing in foreign currencies.

He has presided over soaring inflation and borrowing levels, but insists the lira's plight is the result of a "campaign" led by foreign powers.

• Is Turkey heading for an economic crisis?

• Turkey's lira slump explained

Jailed pastor

Mr Erdogan has accused the US of trying to "bring Turkey to its knees through threats over a pastor".

But the US insists Andrew Brunson, a long-time Turkish resident who ran the tiny Izmir Resurrection Church, is "a victim of unfair and unjust detention".

US President Donald Trump has called pastor Andrew Brunson "an innocent man of faith"

An evangelical from North Carolina, he has been held in Turkey for nearly two years over alleged links to the outlawed Kurdistan Workers Party and the Gulenist movement, which Turkey blames for a failed coup in 2016.

On Wednesday, a Turkish court rejected his latest appeal to be released from house arrest. A higher court is still to rule, his lawyer told Reuters.

White House press secretary Sarah Sanders said the US had seen "no evidence that Pastor Brunson has done anything wrong".

Mr Brunson has denied charges of espionage, but faces up to 35 years in jail if found guilty.