Turkish households and businesses have sold billions of dollars in response to President Erdogan's call to help the economy. But will it stop the lira from losing its value?
Turkey's economic fundamentals are among the strongest in Europe. But its growth rate is slowing and the value of its currency, the lira, is falling – in large part due to the confidence of foreign moneymen in the economy.
On a domestic footing though, Turks are still betting on the lira – and in extraordinary ways.
Why are Turkish citizens changing US dollars into lira?
It's in response to President Recep Tayyip Erdogan's request to support the currency.
"Those who keep their foreign currency under a mattress should turn them into lira and gold," he said, in a passionate appeal on December 2 in Ankara, asking people to exchange their US dollars for Turkish lira.
The lira has been under pressure for a couple of months, but the decline in recent weeks has been steady when compared to other emerging market currencies such as those of India and South Africa.
Since the president's speech, households and businesses have sold around $6 billion dollars, Dr Emre Alkin, vice president of Istanbul Kemerburgaz University and a monetary economist, told TRT World.
The first to act were small traders such as a barber who offered free haircuts to anyone who sold $300, or a fish vendor who gave free meals to those who came with a dollar sale receipt in hand.
"We did it for our nation," Ender Yildiz, owner of a furniture showroom in Konya, told TRT World.
"You might think it has entirely to do with [Erdogan's] AK Party, but politicians come and go. Turkey is not going anywhere."
Amid patriotic dollar-selling campaigns across Turkey, lira rallies big for a second day, dropping back below 3.40 per $ pic.twitter.com/LEIs4K5Pjl— Benjamin Harvey (@BenjaminHarvey) December 7, 2016
Soon after the president's speech, Yildiz advertised that customers who brought in evidence of having exchanged $2000 would get free giveaways.
"Since then we have given away 400 rugs and more than 600 curtains," he said.
This is not the first time Turkish people have reacted in a way that contradicts the profit-making behaviour expected in such circumstances.
In the days following the July 15 coup attempt, Turks sold around $12 billion in the market to prop up the lira.
What's happening to the lira?
The lira has lost around 15 percent of its value against the dollar since the start of the year.
A currency generally comes under pressure when a country's government or banks owe a lot of money to foreign debtors. Turkey's case is somewhat different.
Turkish banks owe very little to foreign lenders. And unlike some of its European neighbours such as Italy and Greece, the government's budget is well under control.
"We have a debt problem in the private sector," said Professor Alkin. "Once upon a time it was cheaper to have foreign currency debt than a lira loan."
Turkey's debt-to-GDP ratio is 33 percent, according to the central bank. That's far less than the 60 percent limit mandated for EU member states.
As Turkish companies borrowed money from overseas banks to fuel the economic expansion during the last 10 years, their debt reached $210 billion, an amount equivalent to 50 percent of Turkey's gross national product (GNP), a broad measure of a nation's total economic activity.
Foreign investors worry that these companies might face difficulty in paying off those loans, especially after the lira's recent depreciation.
But Alkin points out that most of the companies have secured those loans against collateral paid in dollars. And, on average, just a small portion of these loans must be repaid in the next 12 months, he said.
In fact, Ozgur Altug, chief economist at global brokerage firm BGC Partners, told the Financial Times that Turkish private-sector companies have stashed away $150 billion in undeclared overseas accounts – giving them a comfortable cushion if loan repayments are called in.
Turkey's central bank is also sitting over reserves of $50 billion, sufficient to cover any immediate demand if foreign banks ever feel the need to call in their debt, said Alkin.
Can selling your dollars stop the downward slide of the lira?
That's very unlikely, said Professor Alkin.
According to Bloomberg, every adult Turkish citizen would have to exchange $300 daily to arrest the lira's fall.
What has really driven down the value of the lira is the perception of Turkey's relations with the European Union and what's happening in neighbouring Syria, Alkin said.
Around 50 percent of Turkey's exports go to Europe.
"So right now the best thing to do is stop talking about the dollar and exchange rate. If people want to sell dollars to support the lira, then it's very good. But the more we talk, the more the investors panic."
The lira will recover after there is clarity in the government's policy on the EU and the US, Alkin said.
Fund managers, who invest money in various countries on behalf of individuals and institutions, say the opportunity to make profits in Turkey remains high — but so do the risks associated with geopolitical issues.
"Turkey is probably the emerging market with the highest rate of earnings growth and yet the market is derating [falling in price]," said Emre Akcakmak, a portfolio advisor at East Capital. "This tells us a lot. There is a lot of political risk premium."
Is Turkey's appetite for dollars a problem for the economy?
Quoting prices and rents in US dollars is becoming more frequent in Turkey, said Alkin. "According to estimates, 50 percent of our internal trade takes place in dollars."
Dozens of shops at the historical Grand Bazaar in Istanbul have shuttered because owners charge rent in dollars. Manufacturers who incur all their costs in liras make their customers pay in dollars.
"It's happening everywhere. You buy a car and a dealer quotes the price in dollars. You want to rent an apartment and the price is quoted in dollars."
Customers who have to pay in dollars but don't earn in dollars rush to market to cover their rentals, pushing down the value of the lira even further.
But that's not discouraging Bunyamin Olgac in the city of Sivas, who is offering free kunefe, a sweet dish, to those who sell $100.
"This will definitely make a change," he told TRT World. "We have always fought back when our stability is at stake."