Erdogan Demands Turks Exchange Their Dollars To Gold, Lira

Tyler Durden's picture

Early this morning, in yet another session of panicked selling, the Turkish Lira crashed to new record lows to just shy of USDTRY 3.60, momentarily going bidless as the currency plunged nearly 400 pips in seconds, after Turkish President Recep Erdogan said the path for investors will be opened with lower interest rates, and urged the central bank to imitate Japan and U.S. where rates are low: “why should we go around with 14-15 percent?” 

The answer is simple: the currency tends to drop when an economy is seen as weak, the political regime unstable, or - yes - a central bank cuts rates, which Turkey, as shown in the chart below, can not afford if it hopes to maintain a stable economy with the lira already at all time lows.

Normally, any other country would find itself in a dilemma: how to lower rates as per the president's demands to stimulate investment and the economy, without killing the economy... but not Erdogan. As AFP notes, the Turkish president "urged" his fellow Turks on Friday to convert their foreign currencies into gold and lira to stimulate the country's economy as the lira continued its slide against the dollar.

"For those who have foreign currencies under the pillow, come change this to gold, come change this to Turkish lira. Let the lira win greater value. Let gold win greater value," he said during a televised speech in Ankara.

It was not exactly clear how a few thousand Turks exchange lira for gold would "let gold win greater value", nor how the same number of locals converting their dollars to lira would withstand another selling onslaught as soon the the Turkish central bank cut rates again, but that's not really relevant for the Turkish president, who appears to have a far better understanding of how to wage "failed coups" than simple finance.

"What necessity is there to let foreign currency have greater value?" he asked.

There was no answer, but as he was speaking, the lira lost value against the US dollar, crashing just shy of 3.60. After his address, it stage a modest rebound at 3.55 against the greenback, a loss of over 1.5% on the day. In November alone, the lira has lost more than 10% against the dollar, and December was not starting off on the right foot either.

And no, he wasn't joking: as Hurriyet reported moments ago, Turkey’s main stock exchange, Borsa Istanbul, became the first institution to convert all of its cash assets into the Turkish Lira a few hours after President Recep Tayyip Erdo?an called on people and institutions to back the struggling currency against the U.S. dollar.  Borsa Istanbul said in a written statement on Dec. 2 that it would convert all of its cash assets into lira and keep them in lira accounts.

Erdogan also warned that there were forces "playing games" against Turkey, which Turks could counter by changing their money. He did not say whom he was referring to. "Don't worry, in a short while, we will destroy this game", clearly referring to "evil speculators" who could be destroyed if only mom and pop exchanged the dollars in their mattress for the local currency.

As noted above, the Lira was also reacting to Erdogan's repeated insistence on lowering interest rates because, he claims, there is "no other remedy". He referred to the United States, Japan and Europe as examples of where rates are low and questioned why Turkey still had such high rates.

In a surprise to some, after several months of rate cuts, the central bank stepped in with an unexpected hike of 50 basis points in its leading rate last month. This prompted many to wonder how long Erdogan will tolerate the insolence of his central banker who clearly has defied his decree. 

To be sure, concerns over Turkey's political instability, including the government's race to expand Erdogan's powers, as well as its cracking relationship with the European Union meant a rally in the lira was shortlived after the bank's announcement.

Worries over Erdogan's influence grew after Prime Minister Binali Yildirim said on Thursday the government would bring a bill to parliament next week which proposes to change the constitution and give greater powers to the president. Considering Erdogan's track record, it is only a matter of time before he appoints himself central bank head too, at which point the Turkish Lira and the Venezuela Bolivar will begin a race which one can reach a value of 0 faster.

Incidentally, anyone who does convert their dollars into gold can simultaneously start a countdown how long it will take for the "authorities" to come knocking and confiscate said gold.

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chosen's picture

The black market economy (using dollars) is probably all that is keeping Turkey afloat.

Fireman's picture


You need some help with your theory of "money". Start today...before it is too late.

Luc X. Ifer's picture

Very bad sign . turkey got booted from EU, not that this is not good :), and now officially The Little Sultan says hasta la vista to the dolla' and shows a high urge for da gold' ...something bad is boiling ...

froze25's picture

Convert to gold? He just signed his death warrant.

ParkAveFlasher's picture

All of sudden, I kinda like this guy Erdogan.

manofthenorth's picture

I was thinking the same thing. Probably going the way of Qaddafi in 3...2...1...


Stuck on Zero's picture

I think the global view by corrupt world leaders is: "If my currency is going to hell then I want everyone's to go to hell."

xythras's picture
xythras (not verified) manofthenorth Dec 2, 2016 1:14 PM

But in his case, Putin will do the hanging

ZorroHedge's picture

He was already going into that direction. What do you think was the intention of the failed coup ? But he is lucky that Russia will probably save his ass.

CPL's picture

He's going about it the wrong way, I know how he can do it.  And you are correct, right now though he's running head first into a brick wall.  (Always the problem with paying peanuts to get monkey's.)

SilverRhino's picture

Come January 21 he is going to get his ass curbstomped.  

Could be the Russians,the Rothschilds or the Americans but someone's going to punch his ticket out.


Ranger4564's picture

Never mind, but where's the delete option?


auricle's picture

I'd exchange for gold and silver, not Lira. The Lira is doomed if Erdogan is this desperate. But it is honorable for him to allow his citizens to get the hell out of a dying currency.

CPL's picture

Nope.  Simpler way.  He would need to shuffle a couple of things around.  His governments issue (all of them actually) is they haven't asked the right questions before making the business proposal.  Instead they are taking the hard road to half ass the economic migration and like all half ass measures, it'll deliver half ass results.

Caught_Fish's picture

The 10 year looks a lot worse. I agree, silver and gold far better choice, either would of trippled in value against the Lira over this period.

AlaricBalth's picture

MDB. Your shameless plugs are becoming tiresome.

Liked it better when you were man enough to be up front about it on your comments.

Luc X. Ifer's picture

Hope MDB not gonna pull that butt-plugs out on this forum ...

Latina Lover's picture

The Turkey is always fat and happy just  before thanksgiving. It rarely ends well for the Turkey.

Newager23's picture

Turkey just declared war on the dollar. His tactic is to use gold as a proxy. If he can push gold higher, then it hurts the dollar. He is basically telling other countries in similar situations to follow his lead. The question becomes, who's next? It probably won't happen tomorrow, but it is something to watch. Very intertesting developemnt.

Yukon Cornholius's picture

This on top of declaring war on Syria. Erdo is having a good week.

Raffie's picture

Erdogan is filled with so much hot air that it is keeping the whole country afloat.

everlearner's picture

From the back of my head I hear that song "Desperado".

Fireman's picture

Like a rat cornered. This tin pot dictator is thrashing wildly and will be unceremoniously dumped in the not too distant future. The next Putsch will not be botched.

Mustafa Kemal's picture

The last one wasnt either. It was successful

chosen's picture

Agreed.  The remaining Turkish Army generals must be really pissed.  Erdogan is destroying Turkey.  My guess is Erdogan's time on Earth is short.

Luc X. Ifer's picture

Ataturk wanted the kind of feudal politics practiced by the tincan sultan kept away forever from turkey i'm sure sooner or later military will decapitate him.

NordikAvenger's picture

With the help of them gulenists, Erdo removed all the troublesome generals in the show trials of 2011.  Now the gulenists are gone - so all that remains in the army are Erdobots.  

Curtains for Turkey, from all reasonable accounts.

I'm sure this is going to make a lot of Turk haters (especially of the hater-greek variety) very very happy.

Dark Daze's picture
Dark Daze (not verified) Dec 2, 2016 12:06 PM

"The answer is simple: the currency tends to drop when an economy is seen as weak, the political regime unstable"

"The answer is simple: the currency tends to drop when Wall Street is engaged to punish countries that won't do US (warfare) bidding"

Fixed it for you.

The Wizard's picture

Good point. It happens to all of the tyranical dictators placed into office by the banksters. Once they refuse to take orders t banksters will beat up on their currency. 

Erdogan figures the time is ripe to fire back

silverer's picture

Thanks, Erd. This will pump up the stacks of the informed.

gregga777's picture

Sh!!! Quiet!!! You'll interrupt the entertainment. Erd-o-gone is self-destructing and taking Turkeg down with him. Watching that happen has become very entertaining.

snakehead's picture

Just a hunch, but I'm guessing you are not Kurdish.

Kaiser Sousa's picture


fucking jive turkey...

Omega_Man's picture

"The answer is simple: the currency tends to drop when an economy is seen as weak, the political regime unstable"


so usd is toilet paper 

Putrid's picture
Putrid (not verified) Dec 2, 2016 12:11 PM

Ha! Bitch!

Don't fuck with the Empire!

It's all looking eerily similar to the last days of the Turkish Empire, Russian forces moving South, Baron de Rothschilds forces operating everywhere.

You are fucked if you get stuck between those fuckers

Hongcha's picture

Another loose cannon going off-message.  I have a feeling he will be persuaded to get back on the wagon.

Omega_Man's picture

he should say... ban US dollar and ban US and anglo american banks.... 

c2nnib2l's picture

And that's how I started loving Turkey :D

buy this precious gold Turks ! 

Luc X. Ifer's picture

That's bad advice, turkish gold quality is very low, it may be the worst in the world

I Feel a little Qeasy's picture

Stop talking shite, a gold atom is a gold atom wherever in the world, you are a fucking moron.

wisehiney's picture

I never believe the consensus, especially right now.


Son of Captain Nemo's picture

For once the nut job gets it right!

BigCumulusClouds's picture

Yes "buy our faltering currency because we say so!".  Sounds like something Obama would tell his foolish followers.

Seasmoke's picture

Hey even assholes can give great advice.

salman's picture

...Last time when somebody said these words..not very good things happened to him and his country...