Turkey is a ‘target of economic war’, says Erdogan

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Turkish President Tayyip Erdogan makes a speech during a meeting of his ruling AK Party in Ankara, Turkey August 4, 2018. REUTERS

ISTANBUL (Reuters) – President Tayyip Erdogan has denied that Turkey is in a currency crisis, dismissing a plunge in the lira as ‘fluctuations’ which have nothing to do with economic fundamentals.

Speaking after U.S. President Donald Trump doubled tariffs on Turkish steel and aluminum imports, Mr Erdogan described Friday’s 18 percent fall in the lira to a record low as the ‘missiles’ of an economic war waged against Turkey.

Mr Erdogan said those who plotted against Turkey in a failed coup attempt in July 2016 were now trying to target the country through its economy, and pledged to fight back. He did not name any countries.

“Those who can’t compete with us on the ground have brought online fictional currency plots that have nothing to with the realities of our country, production and real economy,” Mr Erdogan told a provincial meeting of his AK Party in the Black Sea coastal town of Rize.

“The country is neither crumbling, nor being destroyed or bankrupt or in a crisis,” he said, and added that the way out of the ‘currency plot’ was to boost production and ‘minimize interest rates’.

The Turkish lira has lost about 40 percent this year alone, largely over worries about Mr Erdogan’s influence over the economy, his repeated calls for lower interest rates in the face of high inflation and deteriorating ties with the United States.

The two governments have been at odds over a wide range of topics – from diverging interests in Syria, to Turkey’s ambition to buy Russian defense systems, and the case of evangelical pastor Andrew Brunson, who is on trial in Turkey on terrorism charges.

An important emerging market, Turkey borders Iran, Iraq and Syria and has been mostly pro-Western for decades. Financial upheaval risks further destabilizing an already volatile region.

A meeting on Friday unveiling a new economic approach by Turkey’s finance minister Berat Albayrak, Mr Erdogan’s son-in-law, did little to offer support for the free-falling lira as investors sought concrete steps such as an interest rate increase to restore confidence.

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