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President Recep Tayyip Erdogan ordered a decree on Thursday announcing that contracts for sales, rent and leasing must in future be made in lira.

He has repeatedly blamed the central bank for high inflation, which hit nearly 18% last month, its highest level since 2003.

Turkey's shopping mall industry has more than $15 billion of debt which firms could struggle to repay if they are unable to generate foreign currency revenues, Belgu said, adding that such decisions may spook foreign investors who account for about $17 billion of a total $58 billion invested in shopping malls.

The depreciation has fueled higher import costs, contributing to an inflation rate that is more than three times the central bank's target, and many investors are calling for a large increase in borrowing costs to put an end to the rout.

It said: "Accordingly, the committee has chose to implement a strong monetary tightening to support price stability".

Piotr Matys, emerging markets foreign exchange strategist at Rabobank, said the central bank had taken a decisive step which should allow it to gradually restore confidence in the lira.

A "tight stance in monetary policy will be maintained decisively until inflation outlook displays a significant improvement", it added.

The bank must balance concerns over slipping growth, which, although a robust 5.2 percent in the second quarter on an annual comparison, showed signs of weakness with some analysts predicting Turkey is heading for recession.

He earlier charged the bank with failing to control inflation and again aired his unorthodox view that low rates bring inflation down. Rising U.S. interest rates have discouraged the riskier reach for yield, deepening home-grown crises.

"Obviously, it will have negative consequences on the economy but, I would say, it is less important if you have a hard landing than big corporate defaults due to a vicious cycle between (lira) depreciation and inflation", he said.

Anthony Skinner, director of Middle East and North Africa at Verisk Maplecroft, told AFP he believed the hike had already been agreed.

The bank said it was hiking its main interest rate by 625 basis points to 24%, double the market consensus for the raise.

The bank later said funding would be provided via the policy rate, the one week repo auction rate, instead of through overnight lending from September 14.

Analysts say the lira´s plunge last month had been sparked by a combination of concerns over domestic policymaking and a crisis in relations with the United States.

Erdogan, a self-described "enemy of interest rates", assumed new powers under an executive presidential system following an election in June and has appointed his son-in-law as finance minister.

The US earlier hit Turkey with tariffs on items such as steel and aluminium in an effort to increase pressure on the country to free the detained American pastor Andrew Brunson.

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