The comments came after a widening diplomatic spat with the US prompted market turmoil in the country. Investors were not reassured. Although the lira rose slightly, it still hit a new record low against the dollar and stock markets in Europe and Asia fell. Before the announcement the lira was down 9% before recovering slightly to be 6% lower in late morning trading in Turkey.
Turkey's interior ministry said it was taking legal action against 346 social media accounts it claimed had posted comments about the weakening lira in a provocative way.
Sputnik spoke to financial expert, Emre Alkin, about the impact the crash of the Turkish Lira could have on the economy.
Sputnik: What has caused the slide in the Turkish lira?
Emre Alkin: As an emerging country, we are lacking savings, as we lack private savings, we need foreign borrowing. When you make foreign borrowing of course you turn vulnerable, vulnerable to attacks and external shocks.
This is a fundamental problem, everybody has to be aware they take a foreign loan; they are subject to external shock or foreign exchange rise.
Emre Alkin: We are such levels that the affects the rate that maybe if the pastor was released and the problems with the US would calm down, but it won’t impact the Turkish economy with positivity too much. We are experiencing more than 30% devaluation in months. The come down level, is maybe 15 or 15% lower.
The problem is the priorities of the government, when you have a lot of foreign loans from private to public sector you have to have priorities. These depend on the social and the economical revenues of the investment.
It’s obvious that the government and the private sector did not take their priorities in an appropriate manner.
Sputnik: Could the country’s financial crisis spread to European markets?
But the numbers show it, you’re not talking double digit billions of dollars, its only single digits. When we are talking the Turkish credit market, I can only say we have 7 or 8 billion dollars of problems. These problems can be financed by the big institutions.
Views and opinions expressed in this article are those of Emre Alkin and do not necessarily reflect those of Sputnik.