Trump’s hostile rhetorics against the EU seem to have draw strong reactions from the latter. European Commission President Jean-Claude Juncker points to the “ceasefire agreement” with Trump made just a month ago, and said he hoped Trump will refrain from imposing auto tariffs. However, Juncker warned that the EU won’t let others dictate its own trade policies. And, if Trump violates the deal impose auto tariffs, the EU will “also do that”.
ECB Governing Council member Olli Rehn also urged Trump to stop the “regrettable” trade war rhetoric. And he warned that US exit from the WTO could damage international order. And he hit on Trump’s ungrounded claims and said ECB is certainly not manipulating the Euro. Rehn also defended China and said the Yuan is weaker because of trade war threat.
Another ECB Governing Council member Ewald Nowotny also said “the economic policy of the United States is currently one of the substantial risks to the global economy.” And he warned that unpredictable trade and economic policy, biased rulings in U.S. courts and the dominant role of the Dollar were bad for Europe. He added that there was an increasing interest for Europe “to free oneself from a one-sided dominance.”
In a Bloomberg interview, Trump rejected EU’s offer to scrap auto tariffs on cars if US does the same. He said “it’s not good enough” and added that “Their consumer habits are to buy their cars, not to buy our cars.” He also added that EU is “almost as bad as China, just smaller.”
Turkish Lira lifted mildly as Turkey raised tax on foreign currency savings
Turkish Lira is given a mild lift after the government announce to raise tax of foreign currency savings while scrapping tax on Lira savings. The decision was published in the Official Gazette today.
Withholding tax on foreign currency savings of up to six months was increased from current 18% to 20%. On the other hand, withholding tax on Lira savings of more than one year was lowered from 10% to 0%.
Lira was sold off this week on deepening worries on Turkish banks. Fitch warned that “Turkish banks are particularly exposed to refinancing risk, given their reliance on external funding.” Moody’s also said “there is a heightened risk of a downside funding scenario, where a deterioration in investor sentiment limits access to market funding.”
USD/TRY’s rebound has stalled now at 6.8396. Immediate threat of 7.0000 handle is eased.