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Recent fluctuations in Turkish lira caused by Western ‘operation’: Erdoğan

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President Recep Tayyip Erdoğan has said recent losses in value of the national currency were caused by Western, especially US, “operations” to corner Turkey ahead of local elections.

“The fluctuations in currency … all these are operations to corner Turkey, conducted by the West, especially by the US. All these are political impositions on Turkey as it nears elections,” Erdoğan said at a rally at Ankara on Thursday.

“So what happened to those who were running operations against Turkey? Now they can’t find enough Turkish lira [in the market]. They got into trouble making payments. It backfired. So now the lira’s value is increasing,” he added, referring to a historic hike in the lira’s overnight swap rate.

The Turkish lira’s overnight swap rate in London soared on Tuesday to 330 percent, and the weekly swap rate rose to 125 percent, according to Refinitiv Eikon data, the highest since an economic crisis in 2001, Reuters reported.

Last week, these rates stood at 22 percent and 24 percent, respectively.

Later reports indicated that the rate had climbed over 1,000 percent.

Beginning late on Monday, Turkish banks started to keep lira swap market transactions in London well below a 25 percent limit set by the banking watchdog, four sources with knowledge of the matter told Reuters. It was not clear how much of the limit was being used.

Traders said this caused the unexpected hike in swap rates.

Meanwhile, Erdoğan reiterated his intention to lower interest rates, stating that if interest rates were lower, inflation would also decrease.

“We have a problem here. What is it? Inflation. Inflation has started to decrease, even if just by a little. However, the real problem here is interest rates. As interest rates decrease, inflation will follow,” he said.

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