Erdogan says lira fluctuations due to 'US operations' - Economy

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The recent exchange rate swings are due to "operations by the US and the West to corner Turkey", President Recep Tayyip Erdogan said in a meeting with young people broadcast via social media.

On Thursday, Erdogan sought to portray losses for the lira as a foreign plot, led by the West and the United States, to corner Turkey.

Turkey's President Recep Tayyip Erdogan addresses the supporters of his ruling Justice and Development Party, AKP, during a rally in Adiyaman, Turkey, Tuesday, March 26, 2019, ahead of local elections scheduled for March 31, 2019.

Instead, however, the lira weakened as far as 5.6465 per dollar today from 5.33 yesterday.

"What we have seen in the past week or so is a fairly desperate attempt by the Turkish authorities to support the lira in the short-term by making short-term funding in the lira nearly impossible to achieve for both foreign and domestic parties", Ranko Berich, Chief Market Strategist at Monex Europe told Al Arabiya in an interview.

The president said banks were playing a game on the Turkish lira ahead of Sunday's local elections. "Publish it, what's that going to change?"

Finding substitutes for the Turkey's production of parts for the F-35will take time and slow down the delivery of the aircraft "for a three-month period", the source added.

In an attempt to stabilise the currency since an initial sell-off last Friday, the Turkish government had directed banks to temporarily starve the London market of lira liquidity, according to officials. In February it stood at just under 20 per cent.

Erdogan, meanwhile, on Thursday reiterated his belief that interest rates must be lowered to fight rising inflation, the opposite of what independent economists recommend.

Berich explained that the move by the Turkish authorities has supported the currency in the short-term by completely drying up the lira's liquidity and tightening monetary policy without a formal interest rate hike, but that it has dented investor confidence in the Turkish economy in the longer term.

The head of state noted that the problems faced by Turkey are artificial and are created by a number of countries interested in weakening Turkey.

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