Erdoğan asks citizens to help prop up plunging lira

ERZURUM

Turkish President Recep Tayyip Erdoğan urged compatriots on May 26 to change their foreign currency to the lira to help prop up the embattled currency.

“My brothers, could those of you who have euros and dollars under their pillows invest their money in liras?” he said in the eastern city of Erzurum.

The lira has lost 16 percent of its value against the greenback in a month.

The lira hit 4.92 against the dollar on May 23 before paring back some of its losses later this week after an emergency central bank rate hike.

Ankara has repeatedly said the lira’s fall was a “conspiracy” by unnamed foreign powers to weaken Turkey.

“If the financial sector plays such games to work against our investors and entrepreneurs, know that you will pay a steep price,” Erdoğan said on May 26.

Deputy Prime Minister Mehmet Şimşek said on May 25 that said the Central Bank was capable of taking action against speculative attacks amid the recent volatility in foreign exchange rates.

“Its hands are not tied [...] It will do what is necessary,” Mehmet Şimşek said in a televised interview on private news channel NTV.

He also said the bank had the full support of the government, adding that its decision to hike interest rates on May 23 in order to support the Turkish lira had proved its independence.

“The Turkish Central Bank has taken a strong step that had immediate effects [on the market],” Şimşek said.

On May 23, the Central Bank hiked late liquidity window interest rates, namely the lending rate raised from 13.50 to 16.50 percent while the borrowing rate was kept at 0 percent.

On May 25, the Central Bank fixed foreign exchange rates for rediscount credit repayments for export.

Şimşek said the Central Bank’s step was “effective”, but, on Thursday there were one or two “negative” developments that partly limited its effect.