Erdogan's ban on banks is a desperate move amid Lira freefall

Erdogan has banned three major international banks — BNP Paribas, Citibank and UBS — from performing foreign exchange transactions with Turkish Lira.

The country’s Banking Regulation and Supervision Agency (BDDK) cited the banks’ failure to meet their Turkish lira liabilities in time as the reason for its decision on Thursday. How long the ban will remain in force is unclear.

Ironically, Berat Albayrak, Turkey’s finance minister — and son-in-law of President Recep Tayyip Erdogan — met with international investors at a video conference organized by Citigroup and Societe Generale the day before the surprise ban on the bank. 

However, the ban on the three banks is unlikely to encourage international investors, and has been seen as an attempt to curb the freefall of the Turkish lira against the dollar.

“This ban on three foreign banks is an act of desperation and most likely a counterproductive move. The same is true for the narrative that the Turkish lira is depreciating because of ‘foreign manipulators,’” Wolfango Piccoli, co-president of Teneo Intelligence in London