Erdogan urges Turks to convert foreign currency to lira

The value of the Turkish lira slid on Thursday after the central bank disappointed markets expecting a sharp rate hike to counter galloping inflation and the weakness of the currency. (AFP Photo/OZAN KOSE)
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Ankara (AFP) - President Recep Tayyip Erdogan on Friday urged Turks to convert their foreign money into gold and lira to stimulate the country's economy as Turkey's currency 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.

The lira lost value against the dollar as he delivered his speech, however, 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 (Erdogan's) call," leading the lira to make up some of its losses against the greenback after it reached record lows of 3.58.

The lira was at 3.50 against the dollar around midnight (2100 GMT) on Friday, down 0.30 percent on the day in another volatile 24-hours for the currency.

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

Erdogan also suggested that there were forces "playing games" against Turkey, which Turks could counter by changing their money.

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

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

He pointed to the United States, Japan and Europe as examples of economies 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 fractious 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 that the government would bring a bill to parliament next week which would change the constitution and hand the president increased powers.

The economy's fragility and the lira decline seem not to have gone unnoticed by the government with its economic coordination committee meeting for five hours on Friday night in Ankara.

In a statement reported by local media after the meeting ended, the committee said it decided on several measures to support public finances, the banking and finance sector as well as the property and labour markets -- but gave no further details of its decisions.

It said "technical studies" would be undertaken before it publicly shares the measures next week.

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