ISTANBUL (Reuters) – President Tayyip Erdogan told Turks to exchange gold and hard currency into lira on Friday as part of a “national battle” against economic enemies he said have irreparably ruptured ties with Ankara.
Turkish President Tayyip Erdogan makes a speech during a meeting of his ruling AK Party in Ankara, Turkey August 4, 2018. Murat Kula/Presidential Palace/Handout via REUTERS
The lira TRYTOM=D3 has now lost around 40 percent this year on worries about Erdogan’s influence over monetary policy and worsening relations with the United States – a relentless slide which turned to meltdown on Friday.
President Donald Trump stepped up the pressure by doubling tariffs on Turkish metal imports, in the latest round of a dispute focused around the terrorism trial in Turkey of a U.S. evangelical pastor whose freedom Washington is demanding.
The two countries are also divided over the detention of three locally employed U.S. consular staff, Washington’s sanctions on Iran, Turkey’s plans to buy a Russian missile defense system, and their military interventions in Syria.
In a day of extraordinary volatility the lira lost as much as 20 percent, crashing to a record low of 7 to the dollar, before paring losses to trade at 6.36 at 1513 GMT.
“The dollar cannot block our path. Don’t worry,” Erdogan told a crowd in the northeastern city of Bayburt.
“However, I say it once again from here, if there is anyone who has dollars or gold under their pillows, they should go exchange it for liras at our banks. This is a national, domestic battle,” he said.
“This will be my people’s response to those who have waged an economic war against us.”
Erdogan’s comments offered no support for the currency, which fell as he spoke. A nearly hour-long presentation on Turkey’s new economic policy by Treasury and Finance Minister Berat Albayrak – Erdogan’s son-in-law – also did little to limit the currency’s free-fall.
Without naming countries, Erdogan said supporters of a failed military coup two years ago, which Ankara says was organized by a U.S.-based Muslim cleric, were attacking Turkey in new ways since his re-election two months ago.
“Some countries have engaged in behavior that protects coup plotters and knows no laws or justice,” Erdogan said. “Relations with countries who behave like this have reached a point beyond salvaging.”
Turkey was facing artificial financial volatility, Erdogan said, and people should look to the “big picture” instead of foreign exchange prices.
Turkey had made important progress with other countries, he said, naming Iran, Russia, China and “some European countries”, Erdogan said, adding that increasing production, exports and employment was the best response to the country’s challenges.
“Don’t get too excited…You will not be able to topple this nation,” he told the crowd of supporters in Bayburt.
Not everyone in Turkey shared Erdogan’s confidence. The main opposition Republican People’s Party (CHP) leader, Kemal Kilicdaroglu, said imprudent government policies meant Turkey had to borrow to pay off the interest on existing debt.
“The lira is melting like a candle against the dollar,” he tweeted.
Additional reporting by Sarah Dadouch; Writing by Dominic Evans; Editing by Mark Trevelyan