Turkish President Recep Tayyip Erdogan has stated that investors who buy foreign currencies expecting the Turkish lira to fall, will pay “a very heavy price”, independent news site T24 reported on Sunday.
Erdogan spoke at the third joint rally held by the People’s Alliance – a formation of the governing AKP and Nationalist Movement Party (MHP) – in Istanbul’s Yenikapi Square on Sunday, just one week before Turkish citizens will cast their votes.
“If you buy foreign currencies thinking they will strengthen; if you get involved in such provocative acts, you will pay a very heavy price,” Erdogan said, directly addressing the finance sector.
The Turkish president’s warning came shortly after the Turkish lira tumbled more than 4 percent against the US dollar in its biggest one-day fall since the currency crisis in August last year, breaking the barrier of TL 5,5 against the dollar on Friday.
“We know your identities”
Directly addressing those buying foreign currencies just days before the elections, Erdogan added, “We know all of your identities. We know what all of you are doing. Now the Banking Regulation and Supervision Agency (BDDK) has taken steps. But you should know that we will make you pay a very heavy price after the elections.”
The president further said that the investigation was being conducted by the Treasury and Finance Ministry but did not specify who his comments were aimed at.
On Saturday, Turkey’s banking watchdog, BDDK, announced that it had launched investigations into complaints that a JP Morgan report, published on Friday, hurt the reputation of Turkish banks and caused volatility in financial markets.
The JP Morgan report noted a high risk that the lira would decline after the local elections, recommending clients to go “long” on the US dollar – advice that is typical of client notes from banks globally, according to Reuters.
The BDDK said that the probe was in response to complaints that the recommendation was “misleading and manipulative”.
Turkey’s Capital Markets Board (SPK) also launched its own investigation on JP Morgan.
“Turkish authorities are shooting themselves in the foot here. JP Morgan analysts are just doing their jobs,” Timothy Ash, a strategist at BlueBay Asset Management in London tweeted on Sunday.
Case of the Turkish authorities shooting themselves in the feet here. JPM analysts are just doing their jobs. https://t.co/GQV7tiEBg7
— Timothy Ash (@tashecon) March 24, 2019
Ash warned that launching an investigation into JP Morgan risked deterring the foreign capital flow essential to Turkey’s economy.
JP Morgan is a multinational investment bank and financial services company headquartered in New York City. It is the largest bank in the US and is ranked by US rating agency Standard & Poor’s (S&P) Global as the sixth largest bank in the world.
The Turkish lira hit record lows in August 2018 after a diplomatic row between Turkey and the US over the almost two-year detention of an American pastor and Erdogan’s unorthodox economic policy that undermined the Central Bank’s independence.
Berat Albayrak, Turkey’s finance minister, has repeatedly claimed that the exchange rate volatility the country witnessed last year was the result of a foreign attack.