Turks abandoning lira as currency woes hit home

A digital billboard giving updates on currencies and the Turkish stock exchange in Istanbul on Monday. Last Friday, the lira depreciated by 14 per cent.
A digital billboard giving updates on currencies and the Turkish stock exchange in Istanbul on Monday. Last Friday, the lira depreciated by 14 per cent. PHOTO: AGENCE FRANCE-PRESSE

ANKARA • Turks are throwing in the towel on their national currency. President Recep Tayyip Erdogan's repeated calls for citizens to convert their considerable foreign-exchange deposits to support the lira are falling on deaf ears.

At the heart of Istanbul's merchant capital, in the world's oldest covered market, there are signs it is starting to damage his credibility and chipping away at his support.

"I have respect for our President, but I can't sell my gold and foreign currency just because he made that call," said retiree Sevin Temur, 58. "I have cut down on food for those savings."

For a leader who prides himself on having made Turks more prosperous during his 15 years in power, the failure to back his lira demands with any policy action comes as a surprise - and a betrayal.

Since Mr Erdogan first made the call in December 2016, the lira has been the world's worst currency, losing about half its value against the US dollar and euro. Last Friday, it depreciated by 14 per cent.

"I have lost about 1 million liras," said jeweller Cahit Bas, 48, referring to a figure worth US$155,000 (S$213,000) now, but US$340,000 in mid-2016. "I think we are heading for a crisis even worse than the previous one." Two merchants at the covered market committed suicide in the past week alone, he said.

"I am so regretful I didn't buy dollars. I feel like a fool," said Mr Bulent Ucuran, a 36-year-old shopkeeper. "When we have so many experienced people, leaving the entire economy to the son-in-law created insecurity," he added, referring to Mr Erdogan's decision to name his daughter's husband Berat Albayrak, 40, the minister of a newly combined treasury and finance ministry on July 9.

That appointment also unnerved international investors, who were used to dealing with steady hands on the economy even as Mr Erdogan's personal pronouncements became increasingly unpredictable.

Then a row with the United States made things even worse, ultimately triggering a currency plunge that risks turning into a full-blown financial crisis, according to investors.

Turkey's refusal to release American citizens and diplomatic employees imprisoned in the aftermath of a coup attempt against Mr Erdogan in 2016, including Pastor Andrew Brunson, led the US to begin imposing sanctions earlier this month.

Said Mr Bas, the jeweller: "They should give up the priest immediately. They should have put him on the plane with the last delegation to the US and said, 'Here, take him.' "

His colleague Abdis Akbulut had similar sentiments about Mr Erdogan's managing of foreign affairs.

 

"Turkey's a very big country, but we can't fight with everyone in the international arena," he said. "You can't go out and fight one day with America and the next with Germany. Every outburst by Erdogan explodes on us."

Ms Basak Genc, 38, said she was trying to deal with the turmoil by pulling all of her money out of the bank. "We couldn't get any foreign currency out yesterday; we wanted to take out US$50,000, but they directly said 'no'," she said.

But not everyone placed the blame on the government.

Mr Osman Sutuna, who sells items like rugs and cloth bags to tourists, said it was time for a wholesale revamp of Turkey's foreign policy. Turkey should hold a referendum on leaving Nato, he said. "Doing business with the US is like sleeping with a python - you don't know when you are going to get bitten."

Mr Sutuna was interrupted by an eavesdropper from across the way.

"So, we all deserve this, and from now on I am going to vote for Erdogan - I am going to sell everything I have to support him!" the person yelled sarcastically, declining to give his name out of fear of possible retribution.

"Since you all want a caliphate, bring it on, and let us all just relax about it."

BLOOMBERG

 
A version of this article appeared in the print edition of The Straits Times on August 15, 2018, with the headline 'Turks abandoning lira as currency woes hit home'. Print Edition | Subscribe