Turkish lira crisis gets worse with fresh 11% plunge

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In a call with reporters late Sunday, Turkey's finance minister Berat Albayrak said Ankara was planning to roll out an "action plan" on Monday in response to the crisis.

Erdogan's spokesman Ibrahim Kalin also warned against "speculative news or actions", saying that Turkey's financial institutions were taking "necessary steps to keep financial stability".

This weekend Turkish President Recep Tayyip Erdogan called on Turks to help support the lira by selling their dollars and euros.

In an opinion piece Sunday, CNN National Security Analyst Samantha Vinograd wrote that Turkey's being a North Atlantic Treaty Organisation member "hasn't stopped (Erdogan) from cozying up to Russian President Vladimir Putin and buying defense assets from him (a United States sanctions violation) or voicing contentment over Russia and Turkey's ongoing cooperation in the energy and defense industry sectors during a conveniently timed phone call on Friday".

Details and implementation of the plan remained vague. "It is clear that these attacks will continue for a while".

Erdogan's comments on interest rates, along with his recent appointment of his son in law, Albayrak, as finance minister have intensified concerns the central bank is not independent.

In an interview with Hurriyet newspaper, Albayrak said a plan has been prepared for banks and the real economy sector, including small to midsized businesses that are the most affected by the foreign exchange fluctuations.

The Central Bank announced measures on Monday morning to bolster the ailing lira, pumping cash into the market to stop its slide.

Yet the dollar was still up nearly 10 percent on the day at 7.0000 lira.

Pakistan on Monday expressed solidarity with Turkey as the country grapples with a currency crisis that saw the lira plunge as much as 20% last week against the United States dollar.

In his speech, Erdogan, referring to industrialists, said, "Do not prefer to rush to banks and buy foreign currency".

Indeed, the single currency sank to a one-year trough against the Swiss franc around 1.1300 francs, while hitting a 10-week low on the yen around 125.45.

Spanish banks have $83.3 billion in exposure to Turkish markets, while French banks are owed $38.4 billion and Italian banks owed $17 billion.

Turkish bank shares .XBANK fell to their lowest in dollar terms since November 2003 and their dollar bonds and sovereign dollar debt tumbled.

Meanwhile, Turkey's Financial Crime Investigation Board (MASAK) also launched a probe into what it described as "fake news" aiming to manipulate economy.

He also said he expected the exchange rate to return to a "rational level" and that Turkey had an action plan in place.

The problems facing Turkey's economy are complex, with GDP growth running strong and fiscal policy loose.

On Sunday, speaking to supporters in Trabzon on the Black Sea coast, Erdogan dismissed suggestions that Turkey was in a financial crisis like those seen in Asia two decades ago. He has used his new power to put pressure on the central bank to not raise rates.

"President Erdogan of Turkey is showing no sign of backing down against the USA", said market analyst David Madden at CMC Markets UK, adding the crisis risked having a "knock-on effect" around Europe.

That raised alarms in Western capitals and the US Congress that Turkey was becoming a less reliable partner in North Atlantic Treaty Organisation despite hosting the US and other allies at its Incirlik air base for the fight against Islamic State.