Turkish regulator files criminal complaints over lira’s moves

Turkey’s banking regulator has filed a criminal complaint against more than 20 people, including former central bank governors, journalists and an economist, over alleged attempts to manipulate the country’s exchange rate in a move that could chill criticism of the government’s unorthodox economic policies.

The Banking Regulation and Supervision Agency said on Twitter on Monday it was seeking legal action against 26 people and Twitter accounts over “their posts on social media and [through] media outlets”, amid a currency crisis that has slashed 35 per cent from the value of the lira this year.

Among those accused are Durmus Yilmaz, who led the central bank between 2006 and 2011 and is now an opposition lawmaker. Rusdu Saracoglu, another former central bank governor, is also on the list posted by the banking watchdog.

The regulator said its complaint was based on an article in the banking law which prohibits making statements in the media that could discredit or damage a bank’s reputation.

The Turkish government frequently uses the courts to silence its critics and has launched criminal suits against journalists and social media users for their statements during previous bouts of volatility in financial markets.

President Recep Tayyip Erdogan has argued that a weaker lira will boost exports and economic growth and has ordered the central bank to cut interest rates despite official inflation rates above 20 per cent. He argues that high interest rates fuels inflation, contrary to mainstream economic theory.

Erdogan was forced to introduce emergency measures on December 20 as the lira tumbled to a record low of 18.4 to the dollar, down 60 per cent over the year. The rescue plan, which includes state guarantees to compensate savers against the currency’s devaluation, has helped the lira recover to 11.5 against the dollar.

A sharp decline in the central bank’s foreign currency reserves at the start of last week suggested that state institutions had bought billions of lira to shore up the currency. Turkey’s net foreign assets fell by $5.9bn in the first two days of last week, according to Financial Times calculations based on central bank data.

The finance minister, Nureddin Nebati, said in a television interview on Monday that there had been no such interventions on December 20 and that the lira had recovered most of its losses after Turks “raced to sell their dollars” following Erdogan’s promise to protect lira deposits.

Guldem Atabay, an economist who writes for the website Para Analiz and who was named by the central bank, said she had not yet been formally notified of the complaint but suspected the move related to concerns she had expressed over potential risks in the new deposit instrument.

“The complaint serves as a threat to the other economists who are also drawing attention to the government’s policy mistakes,” she said. “I will continue to try to inform people about what I see, which is based on the math and science.”

 

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