December 7, 2016 / 3:38 PM / 3 years ago

Turkey's Erdogan says battle to shore up lira same as fight against Islamic State

ANKARA (Reuters) - Turkish President Tayyip Erdogan drew parallels on Wednesday between Turkey’s battle against Islamic State militants in Syria and efforts to shore up the lira, urging citizens to continue selling dollars and blaming speculators for the lira’s decline.

Turkish President Tayyip Erdogan makes a speech during his meeting with mukhtars at the Presidential Palace in Ankara, Turkey, December 1, 2016. Yasin Bulbul/Presidential Palace/Handout via REUTERS

Erdogan has called for Turks to convert forex into gold or lira after the currency saw its worst month in November since the 2008 financial crisis, hit by a strong dollar and concern about political stability after July’s failed coup.

“Our economy is being targeted through foreign exchange speculation,” Erdogan said in a speech to provincial administrators in the presidential palace in Ankara, adding that he saw no financial reason for the currency’s latest slide.

“There is no difference between Turkey’s al-Bab operation and the efforts to stop forex speculation,” he said, referring to Turkey’s military presence in northern Syria, where it is backing a group of Syrian rebels in an effort to clear Islamic State and a Kurdish militia from its border.

Erdogan accused currency speculators, and Ankara’s military opponents of trying to “divide and destroy” Turkey.

Barbers, restaurants, gold sellers and stonemasons were among those who responded to Erdogan’s call by offering free goods and services to citizens with proof for having converting their dollars to lira.

“If you love this country, if you love this people, my friend, you should switch to Turkish lira,” Erdogan said.

Turkey’s defense ministry became the latest institution on Wednesday to answer Erdogan’s call saying it had converted into lira $262.7 million and 31.3 million euros ($33.5 million) held by the defense industry support fund.

Broadcaster NTV reported that energy market regulator EPDK had decided to hold natural gas distribution tenders in lira instead of dollars. Istanbul Stock Exchange last week said it had converted all of its cash assets to lira. It did not give an amount.

The lira has lost as much as one fifth of its value against the dollar this year, but rebounded sharply on Tuesday and is now down some 15 percent since the start of the year against the U.S. currency, standing at 3.4230 at 1200 GMT.

In another step to support the currency, the final 657 million euro ($704 million) tranche to be paid by telecoms operators who won a 4.5G mobile phone frequencies tender will be made in lira, an official familiar with the matter told Reuters.

Erdogan repeated that Turkey was in talks to allow commerce with China, Russia and Iran to be conducted in local currencies.

Additional reporting by Tulay Karadeniz and Tuvan Gumrukcu; Writing by Daren Butler; Editing by David Dolan and Ralph Boulton

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