Turkey sharply raised tariffs Wednesday on some U.S. imports as a court kept a detained U.S. pastor under house arrest, extending a fight between the two NATO allies that has sent the country’s currency plummeting.
Despite the moves, the Turkish lira USDTRY, -5.0312% got a respite, rising against the U.S. dollar for the second day in a row, up 5.5% in recent trading, with one dollar buying 6.04 lira. Traders credited the rebound to a decision by the financial regulator Wednesday, the second this week, to tighten restrictions on banks’ foreign exchange transactions.
The currency, hit by investor concerns over Turkey’s financial stability, plunged last week when the U.S. imposed sanctions on Turkey for not freeing Andrew Brunson, a pastor who faces terrorism charges and as much as 35 years in prison.
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