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

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

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

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

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

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

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

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

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

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

“As of today I have not seen the central bank fix inflation rates as they promised,” Mr Erdogan said.

“Interest rates are the cause, inflation is the result. If you say ‘inflation is cause, the rate is the result’, you do not know this business, friend,” he added.

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

source: BBC