Turkish lira gains after Trump intervenes in dispute with Greece

Turkey’s lira strengthened on Thursday after U.S. President Donald Trump urged the Greek and Turkish governments to step back from confrontation in a territorial dispute.

The lira, which briefly hit a record low against the dollar on Wednesday, rose 0.3 percent to 7.34 per dollar in Istanbul. That pared losses for the year to 19 percent.

Trump said Turkish President Recep Tayyip Erdoğan and Greek Prime Minister Kyriakos Mitsotakis should pledge to negotiate a settlement during phone calls he held with the two leaders. Navies from the two countries have been holding rival military exercises in an area between Cyprus and Crete this week as tensions over territory and hydrocarbon exploration rights intensified.

“President Trump reaffirmed that Greece and Turkey must commit to dialogue, which is the only path to resolving their differences,” White House Deputy Press Secretary Judd Deere said on Twitter, referring to the phone call with Erdoğan.

Erdoğan told Trump that Turkey had proven with "concrete actions" that it wants to reduce tensions and establish dialogue on the matter, the Turkish Communications Directorate said in a statement, according to state-run Anadolu news agency.

The lira has slumped this year mainly due to investor concerns about the economic policies followed by Erdoğan’s government and the central bank, which have led to a borrowing boom, the erosion of Turkey’s foreign currency reserves and a widening current account deficit. But regional tensions with Greece and other neighbours have added to pressure on the currency.

German Foreign Minister Heiko Maas visited Athens and Ankara on Tuesday as the European Union stepped up efforts to get Greece and Turkey to withdraw their military forces and negotiate a solution. Greece and Turkey have argued for decades over maritime rights in the Mediterranean and Aegean – many Greek islands lie just off Turkey’s southern and western coastlines.

Erdoğan said in a speech on Wednesday that Turkey will “take what is its right in the Aegean, in the Mediterranean and in the Black Sea”.

If Greece “wants to pay the price, let it come and face us”, Erdoğan said.

Mitsotakis told Trump Athens is ready for "significant de-escalation" in the eastern Mediterranean provided Turkey halts its "provocative actions", according to Kathimerini newspaper.