Turkish President Recep Tayyip Erdogan said his country would defeat attempts to hurt the country’s economy hours after local regulators lifted a ban on three foreign banks from trading in the currency markets.
Erdoğan spoke as Turkey’s banking watchdog said it ended a four-day exclusion of Citigroup, UBS and BNP Paribas from buying and selling liras. Investigations against the institutions would continue, it said.
The lira fell to a record low of 7.269 per dollar last week. It traded 1.1% percent stronger at 7.00 per dollar on Tuesday night local time in Istanbul.
“We are aware of the insidious aims behind the traps being set for our economy and the management of our economy,” Erdoğan said late on Monday in televised comments following a meeting of the cabinet.
The Turkish authorities have sought to defend the lira, with the central bank engaging in currency swaps in the local market with state-run banks to sell dollars for liras. The operations have depleted the central bank’s reserves of foreign currency, which now stand at around zero when subtracting liabilities.
Citigroup, UBS and BNP Paribas are major players in the lira market and have made use of offshore swaps on behalf of clients looking to short the lira. The banking watchdog last week accused the institutions of failing to meet liabilities to local banks, but said on Monday that they had now been met.
Erdogan’s speech was actually meant to announce more relaxations of coronavirus-related restrictions. Turkey will have a four day curfew between 16-19 May, but four more major cities are exempted from inter-city travel bans. Yet, the President devoted most of his speech to politicking, blaming not only foreign conspirators but also the Gulenist terror organization and the opposition for trying to undermine national unity and to gain political mileage out of the epidemic.
Some observers claim an increase in Erdogan’s approval ratings thanks to his astute management of the health crisis, which would mean the speech is an attempt to broaden the offensive on the opposition and to increase support for himself and his AK Party. But, this is not the consensus view. Most pundits claim Erdogan has been weakened by the economic stagnation caused by the health crisis and the inadequate relief response, looking for scapegoats to blame. This camp also claims that there will be a major settlement of accounts within the party once the outbreak is under control.
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