Kremlin Backs Turkish Plan to Dump the Dollar and Trade in National Currencies

Erdogan announced Turkey was preparing to conduct trade through national currencies with China, Russia and Ukraine as ties with the U.S. continue to crumble

Russian President Vladimir Putin and Turkish President Recep Tayyip Erdogan shake hands after a news conference in Russia, May 3, 2017.
Alexander Zemlianichenko/AP Photo

The Kremlin said on Monday that Russia favored bilateral trade with all countries in their national currencies, rather than the dollar, but that the idea needed detailed work before being implemented.

On Saturday, Turkish President Tayyip Erdogan announced that Turkey was preparing to conduct trade through national currencies with China, Russia and Ukraine.

The Turkish lira sank to a fresh record low of 7.24 to the dollar in early Asia Pacific trade Monday, as investors continue to worry over the state of the economy and deteriorating ties with the United States amid a diplomatic row over a jailed American pastor.

>> Turkey's Erdogan and Trump are in a chess match, but neither has the temperament to play ■ Turkey financial crisis: Erdogan resorts to fantasy, paranoia to grapple with crashing lira

Asked about Erdogan's proposal, Kremlin spokesman Dmitry Peskov said Russia had been pushing for such an arrangement with all countries. He said the issue had been raised on more than one occasion during bilateral talks between Turkey and Russia.

Erdogan said on Monday he expected attacks on Turkey's economy to continue but predicted the lira would return to "rational levels" soon, after the Turkish currency hit a record low of more than 7 to the U.S. dollar.

Erdogan, who has described the lira's fall as the consequence of a plot rather than economic fundamentals, also said that spreading false news about the economy was treason and recent U.S. actions were a stab in the back against Ankara.

Germany has an interest in a stable Turkish economy and is monitoring the situation closely, a government spokesman said, when asked about the meltdown of the Turkish currency, which has lost more than 40 percent against the U.S. dollar this year.

A spokeswoman for the German finance ministry said there had been no crisis talks among members of the G20 industrialised countries on the situation.

Turkey's lira has declined sharply this year, largely over worries about President Tayyip Erdogan's influence over the economy, his repeated calls for lower interest rates, and strains with the United States.

The spokeswoman said it was too early to comment on the exposure of German companies to the economic situation in Turkey, and declined to assess the latest developments there.