Erdogan calls Lira decline ‘economic warfare,' invokes Allah against dollar

ERBIL (Kurdistan 24) - Speaking for the first time during the worst week in the history of the Turkish Lira which repeatedly saw all-time lows in exchange markets, President Recep Tayyip Erdogan appeared to put the blame on foreign powers, calling it "economic warfare" and saying, “If they have the dollar, we have our people and our Allah.”

“The dollar does not bind us,” he told a rally of his supporters on Friday in the Black Sea province of Bayburt while boasting of a million-dollar highway project.

“I call on everybody who keeps dollars, Euros, and gold under the pillow to exchange with our national currency. This is a national struggle against those who wage war on us. This will be the best answer to the West,” he said, in a bid to reverse the sharp decline just hours after the Lira fell further to 6.46 against the dollar, the lowest rate ever.

He also rallied against what he called “the interest rate lobby,” revisiting past fierce critique of high interest rates. Turkey's central bank last month refused to raise interest rates as it readjusted its inflation forecast for the end of the year to 13.5 percent, five points higher than what was previously expected.

The Lira has been losing value in recent years due to a lack of liquidity, concerns regarding an erosion of the rule of the law, less foreign investment, Turkey’s involvement in wars in Syria and Iraq, as well as Erdogan’s tightening grip on power.

But Turkey’s deepening diplomatic crisis with the US over the continued detention of American pastor Andrew Brunson and Washington’s imposition of sanctions on two Turkish ministers proved to be the straw that broke the camel’s back, leading to an unprecedented depreciation of the Lira in the face of a continued downward spiral in the nation's financial meltdown.

Erdogan's son-in-law and the Minister for Finance and Treasury Berat Albayrak held a much-awaited press conference shortly after Erdogan spoke.

Albayrak, who is seen as the president's main instrument of control over the nominally independent Central Bank, launched what he termed “the New Economic Approach,” promising in a confident voice to compete in world markets, principles, and sustainability, as well as promoting a tighter fiscal policy and reform, though without much elaboration his plans for bringing such lofty aspirations to fruition.

At the time of writing this report, he had so far refrained from commenting directly on Lthe ira’s decline under his watch.

When Erdogan began his speech, US dollar - Turkish Lira parity was hovering above 5.90, but as it drew to a close, the currency saw another crash to 6.95.

Editing by John J. Catherine