November 27, 2016

Erdogan urges Turks to convert foreign currencies into lira

In November alone, lira haemorrhaged more than 10% against dollar

ANKARA - President Recep Tayyip Erdogan urged Turks on Friday to convert their foreign currencies into gold and lira to stimulate the country's economy as the lira continued its slide against the dollar.

"For those who have foreign currencies under the pillow, come change this to gold, come change this to TL (Turkish lira). Let the lira win greater value. Let gold win greater value," he said during a televised speech in Ankara.

"What necessity is there to let foreign currency have greater value?" he asked.

However, as he delivered his speech, the lira lost value against the dollar, reaching lows of 3.51.

Later the Istanbul Exchange said on its website it would convert all of its cash assets into Turkish lira "in support of the call by H.E. President Recep Tayyip Erdogan" leading the lira to make up some of its loss against the greenback after it reached record lows of 3.58.

The lira was at 3.50 against the dollar after 1500 GMT, still losing 0.68 percent of its value on the day.

In November alone, the lira haemorrhaged more than 10 percent against the dollar.

Erdogan also suggested that there were forces "playing games" against Turkey, which Turks could counter by changing their money. He did not say to whom he was referring.

"Don't worry, in a short while, we will destroy this game."

The Turkish currency was also reacting to Erdogan's repeated insistence on lowering interest rates because, he claims, there is "no other remedy".

He referred to the United States, Japan and Europe as examples of where rates are low and questioned why Turkey still had such high rates.

After several rate cuts earlier this year, the central bank stepped in with an unexpected hike of 50 basis points in its leading rate last month.

But concerns over Turkey's political instability, including the government's race to expand Erdogan's powers, as well as its cracking relationship with the European Union, meant a rally in the lira was short lived after the bank's announcement.

Worries over Erdogan's influence grew after Prime Minister Binali Yildirim said on Thursday the government would bring a bill to parliament next week which proposes to change the constitution and give greater powers to the president.

The economy's fragility and the lira decline seems not to have gone unnoticed by the government with its economic coordination committee meeting on Friday evening in Ankara.

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