Erdogan says Turkey came under ‘economic attack’

Turkish President Recep Tayyip Erdogan has blamed an economic “attack” for the country’s currency crisis.

In a speech to officials from the ruling AK Party in Ankara on Friday, Erdogan said Turkey had “faced a heinous attack targeting the Turkish economy after a series of negative statements from the US about our country were used as an excuse”.

He described the sudden fall in the value of the lira last month, when the currency reached more than seven against the dollar, as an “economic assassination attempt”.

The lira traded flat on Friday before Erdogan’s remarks, holding the gains it made against the US dollar on Thursday after Turkey’s central bank increased interest rates and the government banned the use of foreign currencies in the country’s property market.

The dual developments on Thursday pushed the lira as high as 6.08 against the dollar and it traded flat on Friday morning, standing at 6.03 to the dollar at 07:28 GMT.

The Turkish central bank raised interest rates to 24 percent on Thursday, the biggest increase since Erdogan came to power in 2003, in an attempt to boost the struggling currency and control inflation.

In his speech on Friday, Erdogan said Turkey would see the result of central bank’s independence after it lifted interest rates, adding that his patience with interest rates had limits. He also called on Turks to convert their savings to lira and trust in the national currency.

Health of the Turkish economy 

The lira has lost around 40 percent of its value this year amid growing international concern over the health of the Turkish economy and a damaging diplomatic dispute with the US.

Thursday’s move by the central bank came hours after Erdogan, a self-described “enemy of interest rates”, stated his opposition to any lifting of the rate and blamed the central bank for inflation and high borrowing costs.

The inflation rate in Turkey rose to nearly 18 percent last month.

In a separate development, Erdogan issued a decree that contracts in the country’s property market must be made in lira.

The announcement in the government’s official gazette stated that current agreements in foreign currencies must be changed to lira in 30 days, putting an end to deals in dollars and euros.

The ban is the latest attempt by the government to boost the Turkish currency and discourage Turkish individuals and businesses from using the dollar in international trade and investment transactions. Erdogan has recently called on Turks to exchange their foreign currencies for lira.

Earlier this month, the Turkish president told a business forum in Kyrgyzstan that the US had behaved like “wild wolves” and “using the dollar only damages us”.

“We need to gradually end the monopoly of the dollar once and for all by using local and national currency among us,” he said.

Turkey is involved in a diplomatic standoff with the US over the detention of an American evangelical pastor. Andrew Brunson is being held under house arrest in Turkey after he was charged with espionage and terrorism-related offences.

Last month, the US imposed sanctions on two Turkish government ministers and also imposed tariffs on imports of Turkish steel and aluminium in a bid to pressure Turkey to release Brunson.