Turkish President Recep Tayyip Erdogan is appealing for calm as the country’s currency plunges, urging people to change foreign money into local lira.
The lira tumbled about 10 percent on Friday to another record low as investors worry about Erdogan’s unorthodox economic policies and U.S. sanctions.
Erdogan said during an address to supporters: “Change the euros, the dollars and the gold that you are keeping beneath your pillows into lira at our banks. This is a domestic and national struggle.”
He appeared to blame foreigners for trying to hurt Turkey, saying: “This will be my people’s response against those waging an economic war against us.”
The lira fell further as Erdogan spoke.
President Recep Tayyip Erdogan says his government “will not lose the economic war.”
Turkish newspaper Hurriyet and other media reports quote Erdogan as making the comment to a group of worshippers following traditional Muslim Friday prayers during a visit to the northern city of Bayburt.
On Friday, the Turkish currency plunged to another record low amid concerns over Erdogan’s unorthodox economic policies and a diplomatic row with the United States that has led to sanctions.
The lira hit a record low of 6.24 per dollar on Friday, before recovering to 5.96, down more than 7 percent on the day.
An analyst at Berenberg bank in London is downplaying the risks to Europe’s economy from Turkey’s currency turmoil, saying the impact on trade would be small.
European economist Carsten Hesse said Friday that even if the export of goods to Turkey falls 20 percent that would take no more than 0.1 percentage point from annual GDP in the 19 countries that use the euro currency.
He cautioned that a banking crisis in Turkey could have “some negative repercussions” on eurozone banks that loaned money there or own Turkish banks. But he said that the possible losses seem “too small to cause a significant eurozone crisis.”
Hesse noted that business confidence in the eurozone did not suffer after Turkey’s economy contracted in 2016 in the wake of a failed coup there.
The euro sagged to a 13-month low against the dollar amid worries about the impact of financial market turmoil in Turkey.
The 19-country currency fell 0.7 percent to trade at $1.1450 in morning trading in Europe. The dollar, which traders buy in times of financial concern, was up against most other currencies.
The euro’s fall comes as investors try to come to grips with how big a threat the troubles in Turkey might pose for the currency union. Turkey’s currency sagged to an all-time low Friday amid doubts about the country’s economic management and souring ties with the United States.
The Financial Times added to concerns with a report that the European Central Bank was worried about possible losses at eurozone banks operating in Turkey. European officials also rely on a deal with Turkey to restrain migrant flows in return for aid.
The Turkish currency has plunged to an all-time low amid concerns over the president’s economies policies persisted and as a dispute with the United States showed no sign of subsiding.
The lira hit a record low of 6.24 per dollar on Friday, before recovering to 5.94, down 7 percent on the day. The currency has fallen 66 percent since the start of the year.
High level meetings in Washington between U.S. and Turkish officials over a detained American pastor ended this week without an apparent resolution. Washington imposed financial sanctions on two Turkish ministers and warned of additional measures.
President Recep Tayyip Erdogan on Thursday portrayed the currency drop as a “campaign” to harm Turkey.
He said: “If they have their dollar, we have the people, we have Allah.”