August 29, 2018 / 6:33 AM / 2 months ago

Turkish finance minister says sees no big risk to economy: Hurriyet

French Finance Minister Bruno Le Maire and Turkish Finance Minister Berat Albayrak arrive for a meeting at the Bercy Finance Ministry in Paris, France, August 27, 2018. REUTERS/Benoit Tessier

ISTANBUL (Reuters) - Turkish Finance Minister Berat Albayrak does not expect a big risk to the economy or financial system, he was quoted as saying on Wednesday, amid what investors say is a widening crisis caused by a sell-off in the lira.

The lira has lost around 40 percent of its value this year, driving up the cost of fuel and food and heightening concern about an economic downturn and risks to banks. The currency has been weakened by worries about President Tayyip Erdogan’s grip on monetary policy and worsening rift with the United States.

Ratings agency Moody’s on Tuesday sounded more alarm about Turkish banks, downgrading 20 financial institutions and citing the increased risk of a deterioration in funding.

However, the newspaper Hurriyet quoted Albayrak, who is Erdogan’s son-in-law, as saying he did not see a major threat to the economy.

“We do not see a big risk about Turkey’s economy or financial system,” he told reporters on his flight back from Paris earlier this week, according to Hurriyet.

There were no risks because Turkey’s net public debt and household debt are low and its financial system is strong, Albayrak said.

Albayrak has signalled that Turkey wants to mend its ties with the European Union as it faces what he said are moves by the United States that threaten the global economy. He and Erdogan have also emphasised that Turkey would aim to trade in local currencies rather than use the dollar.

The newspaper also quoted him as saying that steps would be taken to prevent foreign currencies from being used for real estate and shopping-mall store rents and sales.

Retailers in Turkey’s malls, which often pay their rent in dollars, have also said their businesses were suffering due to the ailing lira.

Reporting by Ali Kucukgocmen; editing by David Dolan

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