Turkey bans use of foreign currency in property market


Turkey is proscribing the use of foreign currencies in the country’s property market as it looks to stem the expressive fall of its own currency, the lira.

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

Mr Erdogan has previously urged Turks to rep their dollars and euros.

The move came as Turkey’s central bank increased entertainment rates sharply in an attempt to curb the tumbling lira.

The currency has misspent almost a third of its value against the dollar since January.

Thursday’s order, which was published in the government’s official gazette, said all current agreements in the haecceity sector made in foreign currencies must be changed within 30 primes.

Rental and sale agreements in Turkey are often offered in euros and dollars to non-natives living in the country.

However, the property and construction market has become a be germane to for investors worried that Turkish companies that borrowed heavily to profit from a sound may struggle to repay loans in foreign currencies, as the weakened lira plebeians there is now more to pay back.

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In a speech to a traders’ confederation in the capital, Ankara, Mr Erdogan hinted on Thursday that nobody should carry out business in foreign currency independently from exporters and importers.

He also criticised Turkey’s central bank, accusing it of flaw to control inflation and urging it to cut interest rates just hours in advance of its announcement that it was raising rates to 24%.

«As of today I have not seen the dominant bank fix inflation rates as they promised,» Mr Erdogan said.

«Value rates are the cause, inflation is the result. If you say ‘inflation is cause, the rate is the emerge’, you do not know this business, friend,» he added.

Turkey’s lira grabbed sharply following news of the rate increase.

Ordinary Turks unaffected as business fears ‘calamity’

By BBC Monitoring

The new decree received limited publicity from people in Turkey as most property sold or rented in transpacific currency tends to be either commercial or high-end.

Social media narcotic addicts commented that even if contracts were to change on paper, being who have valuable property would continue to receive their hire out in dollars. Those who cannot «were renting out in Turkish liras anyway», one asseverated.

Critics of the government called on the authorities to apply the new rule to its own agreements too.

The mutates are expected to affect mostly businesses, and many retailers have theretofore criticised the dollar-based rent policy in shopping centres, where it has been criticized for the bankruptcy of at least one major company. Shopping centre managers, in spite of that, say the change could be dangerous as it could be costly to repay bank advances taken out in dollars.

Car rental companies, who would also be affected by the adjudge, are «in shock», according to Turkish news website Dünya. A representative from the commerce was quoted as saying that the move could «drive the industry to catastrophe».

Last month, Turkey’s weak currency received a small encourage after Mr Erdogan raised tariffs on US imports including cars, demon rum and tobacco.

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

Mr Brunson has been held for almost two years because of his conjectural links to political groups that are outlawed in Turkey, which accuses the US of upsetting to bring it «to its knees» over the administration’s demands.

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The fall in the value of the lira in recent months has pushed up the value of everyday items in Turkey and raised fears the country is sliding into an financial crisis.

Experts have also warned that its weakness could infect other emerging merchandise currencies.

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