A board showing the currency exchange rates of the U.S. dollar and the Euro against Turkish lira is on display at a currency exchange office in central Istanbul, Turkey January 12, 2017. REUTERS/Murad Sezer
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President Recep Tayyip Erdogan accused Turkey's enemies Thursday of using currency speculation to try to topple the state and urged the central bank to "thwart these games," saying it had all the tools it needed after the lira plunged to record lows.Economists say the central bank needs to raise interest rates sharply to prevent further weakening.The central bank took steps to tighten lira liquidity Thursday by encouraging lenders to borrow at a higher rate, taking some pressure off the lira.It did not open its regular one-week repo auction, through which it usually funds the market at 8 percent, leaving banks to resort to its overnight lending rate of 8.5 percent interest or its late liquidity window at 10 percent. The lira firmed to 3.7897 to the dollar by 14:00 GMT, after weakening as much as 1.5 percent to 3.9290 in early trade. The economy contracted for the first time in seven years in the third quarter and growth is forecast at 3.2 percent for last year, a far cry from the high single-digit rates on which Erdogan built his reputation as prime minister from 2003-14 .
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