Turkish gov’t launches probe into alleged ‘fake news’ over depreciating lira

The Turkish government has launched an investigation into actions allegedly threatening “economic security,” while Turkey’s financial watchdog launched a separate probe into what it described as “fake news” aiming to manipulate the derailed Turkish economy.

“An investigation has been launched according to Turkish Penal Law, Banking Law, Capital Markets Board (SPK) regulations and related laws into people who displayed actions that threaten economic security through manipulative stories on media and operational social media accounts as part of economic attacks that target the Republic of Turkey, its social peace, unity and economic security by the powers behind the [2016] coup attempt,” the İstanbul Chief Public Prosecutor’s Office said in a statement on Monday according to a report by Turkey’s state-run Anadolu news agency.

Almost all Turkish newspapers as Turkish President Erdoğan’s propaganda apparatus used the same headline on Monday and stated on US sanctions that “We challenge you” by citing Erdoğan’s remarks.

The prosecutor also launched a similar investigation on Monday into social media users. The Turkish Interior Ministry also announced on Monday that an investigation has been launched into 346 social media accounts that have allegedly been threatening “economic security” through sharing “provocative postings” on the dramatically depreciating Turkish lira.

Meanwhile, Turkey’s Financial Crime Investigation Board (MASAK) also launched a probe into what it described as “fake news” allegedly aiming to manipulate the economy.

“MASAK started an investigation into people and institutions that spread fake news, such as those claiming that ‘the state will intervene to convert foreign exchange in accounts into Turkish lira’ and ‘it will fix the dollar exchange rate’ by ditching its floating rate policy, which is a main pillar of the free market,” Treasury and Finance Ministry Press Undersecretary Ali Berber said in a tweet on Monday.

Moreover, the pro-government Sabah daily has launched a campaign against a US-owned television station it says is the media leg of what it calls a financial attack on Turkey. Sabah daily called for a nationwide advertising boycott against Rupert Murdoch-owned Fox TV, publishing a list of companies that advertise with the Turkish station.

“Placing an advertisement with Fox means taking sides in the financial war the US has launched against Turkey,’’ Sabah daily said. Turkish President Recep Tayyip Erdoğan has repeatedly said the slide in the lira has no financial basis, calling it “an attack on Turkey”.

Presidential Communications Director Fahrettin Altun described the rumors as a “disinformation campaign” based on a statement by President Recep Tayyip Erdoğan, who had said Sunday that “you must know that keeping this nation on its feet is not just our duty but also the duty of industrialists and merchants. Otherwise, I will be compelled to implement Plan B or Plan C.”

“This disinformation campaign is part of the economic war that has been waged against our country. At no point in his remarks did the president talk about a potential seizure of foreign currency deposits. The president’s remarks reflected his administration’s determination to maintain the strength of Turkey’s economy and served as a warning against the potential outflow of foreign currency,” Altun claimed.

“Provided that the president did not reveal the details of plans B and C, it is unacceptable that certain people come up with fictitious scenarios in order to unsettle the people and market players,” added Altun.

The announcement came after Turkey’s Treasury and Finance Minister Berat Albayrak said that an action plan is coming into effect starting early Monday to support the Turkish lira.

Albayrak also dismissed any suggestion that Turkey might intervene in dollar-denominated bank accounts, saying any seizure or conversion of those deposits into lira was out of the question, warning that “legal action will be taken against those who spread rumors and lies.”

Turkey’s lira pulled back from an overnight record low of 7,24 to the dollar on Monday after the central bank pledged to provide liquidity and cut lira and foreign currency reserve requirements for Turkish banks.

The announcement came after Finance Minister Albayrak said authorities would start implementing an economic action plan on Monday morning, following Friday’s lira crash, which has spread to global markets.

Turkey’s Banking Regulation and Supervision Agency (BDDK) said early Monday that foreign exchange swap operations have been limited. According to the statement released after midnight, the BDDK said spot transactions, forex swap and forward exchange operations cannot exceed 50 percent of banks’ capital, and new transactions will not be made until these overruns are eliminated. The banking watchdog said due operations will not be renewed and the agreed limit will be calculated daily on a solo and consolidated basis.

The Turkish Central Bank also said it cut the lira’s reserve requirement ratio, a cash buffer held by banks, by 250 basis points for all maturity brackets and lowered reserve requirement ratios for non-core FX liabilities by 400 basis points for maturities up to three years.

These moves will free up 10 billion lira, $6 billion, and $3 billion equivalent of gold liquidity in the financial system, the bank said. It also pledged to provide “all the liquidity banks need.”

The lira TRYTOM=D3 hit a record low of 7,24 against the dollar during in Asia Pacific trade. It pared losses after Albayrak’s comments and the central bank announcement, strengthening to 6,4, before weakening again to 6,92 to the dollar at 0543 GMT.

The currency has lost more than 40 percent against the dollar this year, largely over worries about President Erdoğan’s influence over the economy, his repeated calls for lower interest rates, and worsening ties with the United States.

The lira’s relentless fall turned to meltdown on Friday. It dropped as much as 18 percent at one stage, rattling US and European stocks as investors took fright over banks’ exposure to Turkey.

The renewed lira collapse on Sunday night hit Asian shares, weakened the South African rand and drove demand in global markets for safe currencies including the US dollar, Swiss franc and yen.

Finance Minister Albayrak said in an interview published late on Sunday that Turkey has drafted a economic action plan and will start implementing it to ease investor concerns. “From Monday morning onwards our institutions will take the necessary steps and will share the announcements with the market,” he said, without giving details.

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