Erdogan slams United States over economic attacks

“We are solving the issue of rent in foreign currency which concerns a lot of our vendors once and for all,” Erdogan told a meeting of a traders’ confederation

Erdogan appoints himself chairman of Turkey’s sovereign wealth fund

Turkey's central bank has raised its key interest rate sharply, from 17.75 percent to 24 percent, to contain inflation and support the currency after steep declines this year.

The lira traded at 6.3700 per dollar, up about 0.7 percent on the week and well off its record low of 7.240 reached one month ago.

Relations with the USA deteriorated last month after Washington imposed sanctions on two Turkish ministers over the detention of an American pastor and President Donald Trump doubled steel and aluminium tariffs on Turkey.

Several emerging markets have confronted the same struggles, dogged by a strengthening USA dollar that makes it more hard for countries such as Turkey to pay back hefty external debt. "For a country that is in really deep distress like Turkey, what is important is to restore some of the independence of the central bank and take measures to stem the currency's fall".

"Yesterday the central bank carried out the much talked about interest rate hike".

"The commercial banks were probably switching to more liquid assets, given what has happened to the lira", Jason Tuvey, a senior emerging markets economist at Capital Economics in London said by phone on Friday.

On Friday, Chinese Foreign Minister Wang Yi said the current world trade system was not flawless and Beijing supported reforms to it, including to the World Trade Organisation, to make it fairer and more effective. This as inflation was up to nearly 18 percent in August, its highest since September 2003 - the year Erdogan first took power as prime minister.

Real estate sales and rental deals in foreign currency are common in Turkey particularly in the retail sector
Real estate sales and rental deals in foreign currency are common in Turkey particularly in the retail sector

The depreciation has fuelled higher import costs, contributing to an inflation rate that is more than three times the central bank's target, and many investors are calling for a large increase in borrowing costs to put an end to the rout.

Following the news, the Turkish lira rose 5 percent in value against the United States dollar, reversing its 42-percent fall this year against the American currency. "Any sign that he will try to reassert his influence over monetary policy decisions could quickly cause market sentiment to deteriorate again".

Despite the comments, Erdogan added: "There has been no change in my sensitivities on the issue of interest rates".

Analysts say Turkey needs to raise interest rates to combat inflation, which is running at 16%. Erdogan has recently called on Turks to exchange their foreign currencies for lira.

Argentina agreed a loan earlier in the summer with the IMF and only last month called on the Washington-based lender to release the funds earlier to to ease concerns that the country would not be able to meet its debt obligations over the next year.

He also decreed that local property sales, rental contracts and leasing transactions could no longer be conducted in foreign currency, in a fresh bid to buttress the flagging lira.

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