Central bank hints at intervention as Turkish lira slides

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The Central Bank of Turkey (CBRT) issued a short statement on Wednesday following a slide in the value of the Turkish lira, saying that necessary measures would be taken.

“The CBRT is closely monitoring the unhealthy price formations in the markets. Necessary steps will be taken, also considering the impact of these developments on the inflation outlook,” the statement said.

The lira was valued at 4.50 against the US dollar before the announcement, which helped the lira climb to 4.45.

Turkey’s economy leaders held a meeting on Monday at the headquarters of the ruling Justice and Development Party (AKP) in Ankara. President Recep Tayyip Erdoğan had summoned Minister of Economy Nihat Zeybekci, CBRT Governor Murat Çetinkaya, Finance Minister Naci Ağbal and Prime Minister Binali Yıldırım to discuss recent developments.

According to Reuters, a Turkish source claimed the meeting was about a recent commerce deal signed by Iran and Turkey on using local currencies for transactions.

Çetinkaya’s attendance at a meeting at AKP headquarters was seen controversial considering the central bank’s independence from politics.

On Monday President Erdoğan went to the United Kingdom where he met with fund managers, promising lower interest rates and more central control over the economy, which reportedly raised concerns about the future of Turkey’s finances.

“He picks battles with everybody … he is fighting the opposition, he is fighting Gulen, he is fighting the extremists, he is fighting after the failed coup — now he is fighting the markets, and that is dangerous,” argued one fund manager at a major asset management firm, Reuters reported.

Yesterday British strategist Timothy Ash commented on Erdoğan’s visit, saying he was attempting to attract foreign investors to Turkey and to show his country is still a partner with the West, according to BBC Türkçe.

However, another fund manager who spoke to Reuters seemed unconvinced. “Why the hell would you come to London, and basically send this message to institutional investors which is exactly what they did not want to hear?”

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