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© Bloomberg. Customers at a currency exchange bureau on Taksim square in Istanbul, Turkey, on Friday, Oct. 15, 2021. Turkish President Recep Tayyip Erdogan fired monetary policy makers wary of cutting interest rates further, driving the lira to record lows against the dollar with his midnight decree.

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(Bloomberg) — Turkey’s top investigative body will focus on foreign currency purchases when it probes the reasons behind the lira’s plunge in November, a person familiar with the preparations said. 

Investigators from the State Supervisory Council will be authorized to seek prosecution if criminal activity is suspected, the person told Bloomberg on Monday, speaking on condition of anonymity to disclose confidential details. The state-run Anadolu Agency, which first reported the impending probe on Saturday, said President Recep Tayyip Erdogan has ordered the council to determine whether currency manipulation took place. 

The council will borrow staff and requisition documents and other information from relevant government agencies, the person familiar said. The probe will center on purchases above a still-undetermined threshold, excluding those that stem from “necessity” and transactions related to corporate debt, the person said.

Erdogan Says Turkey Under Attack by ‘Money Barons’ After Pivot

The weakened almost 24% against the dollar in November as Erdogan’s push for lower interest rates — designed to turbo-charge growth and create jobs — instead resulted in concern over price shocks. The central bank has cut borrowing costs by 4 percentage points to 15% since September.

On Monday, Erdogan stood by his unorthodox argument that lower rates will eventually slow inflation.

“I have always argued for lower interest rates and repeatedly said rates should be lower,” the president was cited by state media as saying. “I have never advocated and will not advocate interest rate increases.” 

The council is expected to share the results of its investigation with the central bank, the banking regulator, the markets regulator and the Financial Crimes Investigation Board and may request them to take action, the person said. It may also file criminal complaints, the person said. Investigators aren’t bound to any deadlines. 

The council didn’t respond to a phone query from Bloomberg on Monday.

©2021 Bloomberg L.P.

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