Turkey's Central Bank raised all key interest rates by some 500
basis points at an emergency meeting on Tuesday. Erdogan had long
argued against the move that could hit growth ahead of polls this
year seen as an important test of his popularity.
A photograph in the Hurriyet daily showed staff at Istanbul's main
courthouse carrying boxes of documents which the paper said were
from the offices of two prosecutors who were removed from the graft
inquiry this week.
Altogether, more than 5,000 police officers have been dismissed or
transferred since the graft inquiry became public on December 17
with the arrest of businessmen close to Prime Minister Tayyip
Erdogan and three cabinet ministers' sons.
In the latest upheaval, hundreds of police were transferred from
their posts in Ankara and Izmir on Thursday, and dozens more were
affected in Istanbul and the southeastern city of Gaziantep, Radikal
newspaper reported.
A spokesman at police headquarters in Ankara could not immediately
confirm the reports.
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A similar shake-up in the judiciary has left the fate of the
corruption investigation unclear.
Some 200 prosecutors and judges have been reassigned in a purge of
the judiciary that has brought to a halt the investigation Erdogan
has called a "judicial coup".
The government sees the probe as orchestrated by Erdogan's former
ally, the U.S.-based cleric Fethullah Gulen, whose followers, part
of a group known locally as "Hizmet," or Service, are influential in
many state institutions, including the police and legal system.
LIRA REMAINS WEAK
There is as yet no sign the graft scandal and Erdogan's purging of
police and judiciary he sees as engineering it has produced any
significant fall in his popularity.
Erdogan's AK Party has won three elections since 2002. A hitherto
weak opposition sees local elections next month and a presidential
poll later this year as an opportunity to make inroads into his
vote.
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When the corruption investigation first came to light,
anti-government newspapers showed photographs of police removing
shoeboxes full of money from an official's house. The investigation
has since faded somewhat from public view.
The removal of the prosecutors this week was part of a reshuffle
this week in which some 90 prosecutors were reassigned by newly
appointed Istanbul chief prosecutor Hadi Salihoglu.
Ankara has also relieved state employees of their duties at other
state bodies including the banking and telecoms regulator and the
state broadcaster, firing dozens of executives.
The central bank raised interest rates by around 500 basis points on
Tuesday causing a spike in a currency that has been falling
steadily.
But the lira has since erased much of those gains, returning to
where it was just before the rate hike, although it is still some
way from Monday's record low of 2.39. It was trading at 2.2735 to
the dollar by 1100 GMT.
Ratings agency Moody's said on Friday that pressure on the currency
was likely to continue despite the rate hike, which it said had also
significantly weakened Turkey's growth prospects.
Erdogan has said "a Plan B or a Plan C" for the economy may be
announced by the government in the coming days or weeks, although
his ministers have given no details, beyond saying capital controls
are out of the question.
(Additional reporting by Ece Toksabay; writing by Daren Butler;
editing by Ayla Jean Yackley and Ralph Boulton)
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