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Dec 8, 11:03 AM EST

Turkey's leader renounces foreign currencies to boost lira

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ISTANBUL (AP) -- Turkey's leader has renounced foreign currencies in favor of the ailing lira currency in keeping with his appeal to Turkish citizens to do the same, his spokesman said Thursday, as a new measure was unveiled to help struggling businesses.

President Recep Tayyip Erdogan "exchanged all of the foreign currency in his accounts into Turkish liras," spokesman Ibrahim Kalin said.

Last week, Erdogan had urged his citizens to give up the dollar and euros at a time the economy is teetering. Erdogan called on Turkish citizens to convert savings held in foreign currencies into gold and Turkish lira to help boost the ailing currency, which recently dropped above 3.5 lira per dollar, the weakest exchange rate in more than a decade.

Turkish citizens often hold their money in dollars, euros and gold to mitigate the risk of a rapid devaluation of their currency. Many Turkish businesses have their debts denominated in dollars.

In the wake of Erdogan's call, small business owners have posted pictures of themselves on social media advertising free goods ranging from bread to small carpets for those who can prove the exchange of a significant dollar amount into Turkish lira.

Prime Minister Binali Yildirim announced the establishment of a fund of up to 250 billion lira ($74 billion) to help alleviate cash shortages. He said the measure would help "normalize business across all sectors that fuel the economy, including small, medium and large enterprises, and exporters."

Both leaders have promoted the Turkish lira in in recent days with Erdogan, suggesting last week that Turkey should trade with countries like Russia, Iran and China in local currencies.

The Turkish lira has been struggling in a year marked by political instability, including a failed coup attempt in July, bombings by Kurdish and Islamic State militants, and yo-yoing relations with the European Union and the United States.

Exchange risk is also a concern for Turkey due to its large current account deficit and high inflation rate. Foreign direct investment, which helps keep the economy afloat, has faltered in 2016. Tourism revenue, another mainstay of the economy, has also dropped dramatically.

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