Erdogan says West, US responsible for currency fluctuations

Turkey's President Recep Tayyip Erdogan on Thursday said the West, particularly the United States, was trying to make things difficult for Turkey before Sunday's nationwide local elections.

Exchange rate fluctuations are an operation by the West, particularly the US, to paint Turkey into a corner, the president said in a televised interview.

Such attempts to manipulate exchange rates are a political imposition before the looming local polls, he added.

At the national level, the governing AK Party has built its electoral success over the last decade and a half on Turkey's strong economic growth under Erdogan who has been in power for 16 years first as premier and then as president.

Turkey has to cut interest rates - Erdogan

Erdogan on Thursday also said Turkey has to cut interest rates or the problem with high inflation will persist.

The president said banks were playing a game on the Turkish lira ahead of Sunday's local elections. He added that Turkey needed to "discipline speculators in the market."

Erdogan also said interest rates were Turkey's main issue and inflation would begin to fall as interest rates were cut.

Central bank reassures investors

Turkey's central bank on Thursday sought to reassure investors over its foreign currency reserves after the sharpest drop in the local lira since a spat with the United States triggered a currency crisis last year.

The lira slid nearly 6 percent last Friday. After recovering losses early this week, the lira fell again around 5 percent to 5.59 against the dollar on Thursday morning.

In an interview with Anadolu Agency, central bank governor Murat Cetinkaya said the bank continues to implement its reserve-building policy.

"Although reserves may fluctuate due to periodic factors, there has been a consistent uptrend in reserves in the medium term," Cetinkaya said.

He said gross reserves had increased across all items by $4.3 billion and by March 27 reached $96.7 billion.