Erdogan says those who buy FX, expect lira to fall, will pay "heavy price"

ISTANBUL (Reuters) – The Turkish President Tayyip Erdogan said on Sunday they in the financial sector who buy foreign currency on the expectation that the lira will fall, will pay "a very heavy price", and add that the Ministry of Finance is doing work on this.

The Lira stumbled over 4 percent against the US dollar on Friday, the biggest one-day case since a currency crisis took hold in August, claiming that Turks are buying more foreign cash as bonds with Washington have deteriorated.

On Thursday, central bank data showed that forex deposits and funds, including valuable metals held by Turkish locals, had hit a record high in the week until March 15, which economists said signaled a fall in confidence in the lira currency.

At a local election call in Istanbul, Erdogan said that "some people" had begun to provoke Turkey, and that they were trying to make lira decline against foreign currency with their partners in Turkey.

"I call those who engage in such activities on the threshold before elections, we know all your identities. We know what you all do. Know this, after the election, we will present you with a heavy bill," he said .

Turks will go to polls March 31 for local elections.

Erdogan did not specify who his comments were aimed at, but on Saturday, Turkey's banking and market regulators said they had launched investigations into complaints that a JP Morgan report had caused speculation in the Istanbul Stock Exchange and damaged banks' reputation.

A spokesman for JP Morgan for the region refused to comment on the investigations. The report seen by Reuters said there was a high risk that lira would decline after the local elections and recommended that clients go "long" on US dollars. Such advice is typical of customer notes from banks globally.

Finance Minister Berat Albayrak said on Friday that the speculators talked down the Turkish economy on social media, and that the manipulation resembled what he said, took place during the anti-government protests in 2013.