Turkey ruled on Thursday that property sales, rental contracts and leasing transactions must be made in lira from now on, halting the use of foreign currencies for such deals in a fresh step to support the ailing local currency.
Turkey's central bank on Thursday surprised markets with a bigger than expected rate hike to battle soaring inflation and boost the lira, prompting the embattled currency to surge in value. It has lost around 40 per cent of its value this year.
Turkey's shopping mall industry has more than $15 billion of debt which firms could struggle to repay if they are unable to generate foreign currency revenues, Belgu said, adding that such decisions may spook foreign investors who account for about $17 billion of a total $58 billion invested in shopping malls.
"Deterioration in the pricing behaviour continues to pose upside risks on the inflation outlook, despite weaker domestic demand conditions", the bank added.
"Accordingly, the Committee has made a decision to implement a strong monetary tightening to support price stability", it said.
"It nearly seems like it's a game of "good cop, bad cop" being played out between the Turkish authorities - with President Erdogan on the one hand still making statements regarding his dislike of interest rates and. a very sizeable reaction from the central bank in response to the recent inflationary and geopolitical developments".
Phoenix Kalen at Societe Generale said the market was both pleased and confused by the bank's move.
He earlier charged the bank with failing to control inflation and again aired his unorthodox view that low rates bring inflation down.
The bank said it was hiking its main interest rate by 625 basis points to 24%, double the market consensus for the raise.
Guillaume Tresca, senior emerging market strategist at Credit Agricole said the economy needed to slow down because it was overheating and that an interest rate rise was needed to cap lira depreciation. They increased the cost of cash to commercial lenders by around 150 basis points last month by forcing them to use a borrowing tool costlier than the one-week repo rate.
However, a diplomatic row with the United States and concerns about the president's influence on monetary policy have eroded investor confidence in Turkey in recent months.
Erdogan, a self-described "enemy of interest rates", picked his son-in-law, Berat Albayrak, as finance minister in July.
Relations with the U.S. deteriorated last month after Washington imposed sanctions on two Turkish ministers over the detention of an American pastor and President Donald Trump doubled steel and aluminium tariffs on Turkey.