Turkish Lira depreciates as Turkey prepares for elections

Currency weighed down by concerns over Turkey's balance of payments foreign debt

Currency weighed down by concerns over Turkey's balance of payments foreign debt

Turkey's central bank Thursday sought to reassure investors over its foreign currency reserves after the sharpest drop in the local lira since a spat with the United States triggered a currency crisis a year ago.

Finance Minister Berat Albayrak said on Thursday that Turkish banks were providing billions of lira to foreign markets and he promised Turkey would enter a reform period after the elections and give details soon.

That raised concerns that the money that had poured Turkey to take advantage of the central bank's 24 percent benchmark rate would flee, hammering the lira before municipal elections on Sunday.

In a town hall meeting with students that was broadcast on Twitter, Erdogan said the market gyrations were "a squeezing operation by the West and the United States in particular".

"It's essential to discipline speculation in the markets", he said, adding that he is confident the country's economic situation will improve in the coming months.

Turkey's lira collapsed past year after a diplomatic standoff with the United States led to tit-for-tat sanctions and an increase on USA tariffs on some Turkish products.

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He said gross reserves had increased across all items by $4.3 billion and by March 27 reached $96.7 billion.

Analysts say the Turkish lira's volatility is due to Turkish officials' efforts to support the currency by limiting financial speculation against it.

The Turkish leader also repeated his demand the central bank cut interest rates to help curb inflation that is still in double digits. Turkey has charged JPMorgan with "causing volatility" that prompted a run on the Turkish lira, says Carlotta Gall in The New York Times.

The Turkish liquidity squeeze pushed the London swap rate to a record 1,200 percent on Wednesday but it has since slid back to more normal levels and was 23.75 percent on Friday, as lira-starved foreign investors flocked back in.

"In the coming years, Turkey will further strengthen its economy and military power", said Erdogan.

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