Turkey moves to overcome lira crisis

Finance minister Berat Albayrak assured international investors on Thursday that Turkey would emerge stronger from its currency crisis, insisting that the country’s banks were healthy and strong.

In a conference call with thousands of investors and economists, Albayrak — who is President Recep Tayyip Erdogan’s son-in-law — said Turkey fully understood and recognised all its domestic challenges but was dealing with what he described as a market anomaly.

The Turkish lira hit a record low of 7.24 to the dollar this week, down 40% this year, as investors fretted over Erdogan’s influence over monetary policy and a bitter dispute with the US.

Facing Turkey’s gravest currency crisis since 2001 in his first month in the job, Albayrak has the daunting task of reassuring the investors that the economy is not hostage to political interference.

Albayrak, a 40-year-old former company executive with a doctorate in finance, said Turkey would not hesitate to provide support to the banking sector. The banks were capable of managing the volatility, and there had been no major flow of cash out of deposits lately.

Before he spoke, the Turkish lira strengthened more than 3%, despite signs that a rift with the US is as wide as ever.

The currency shrugged off US comments ruling out the removal of steel tariffs on Turkey even if it frees an American pastor who lies at the centre of the complex feud between Washington and Ankara.

The currency gained some support from the announcement late on Wednesday of a Qatari pledge to invest $15bn in Turkey.

JP Morgan said moves by Turkey to curb the lira’s fall showed they were committed to stabilising the currency with technical measures such as restricting foreign exchange swaps and cancelling repo auctions to push up the average cost of bank funding.