Lira facing 'speculative attack', says İşbank CEO

ISTANBUL - Reuters

Turkey is under a speculative attack as the recent developments in the lira cannot be explained by the country’s economic fundamentals, İşbank chief executive Adnan Bali said on Aug. 13.

In an interview with Turkish broadcaster BloombergHT, Bali also said Turkey had to take steps in line with “the rules of economic discipline” in terms of interest rates, suggesting he wanted to see a rate hike.

The lira plunged on Aug. 13 in early Asia Pacific trade and its tumble of 18 percent at some point on Aug. 10 has spread to global markets.

“This is a serious speculative attack,” Bali said.

“I cannot explain the point we have arrived with economic fundamentals,” he said, echoing Turkish President Recep Tayyip Erdoğan who said the country was the target of an “economic war.”

‘Chemotherapy if needed’

Investors have repeatedly said a rate hike from the central bank is needed to restore trust.

“You may not like it but whatever is needed for interest rates within the rules of economic discipline will be done,” Bali said.

“One would have to go under chemotherapy if needed, interest rates are similar,” he said.

Erdoğan, who has called himself the “enemy of interest rates,” wants cheap credit from banks to fuel growth, but investors say the economy is overheating and could be set for a hard landing.

The rise in the dollar squeezed profit margins and also increased risky assets, Bali said, but he added that there was no outflow of deposits over the past week, when the lira’s tumble accelerated.