Turkey wants to resolve conflicts and make more friends while turning its region into an "island of peace”, President Recep Tayyip Erdogan said on Wednesday.

Speaking to thousands of supporters at a party congress held during a new surge in coronavirus cases, Erdogan also tried to reassure investors spooked by his dismissal of his market-friendly central bank chief, saying Turkey’s economy will prevail.

Turkey has been at loggerheads with NATO allies as well as Arab rivals in the Middle East, angry at Ankara’s increasingly assertive foreign policy.

But in the past few months, Turkish officials have sought to lower the temperature with frequent references to turning a "new page” in relations.

This month Turkey said it had established diplomatic contact with rival Egypt for the first time since 2013.

"We are determined to increase the number of our friends and resolve hostilities in the region, turning it into an island of peace,” Erdogan told his ruling Justice and Development Party’s (AKP) congress in Ankara.

Reassuring investors 

Despite a big jump in new Covid-19 cases, which reached 26,000 on Tuesday, the congress was packed with thousands of AKP members and delegates who travelled from across the country, drawing criticism online.

But Erdogan has talked up Wednesday’s address as an important moment in Turkish politics in which he intended to lay out the country’s future course.

Erdogan’s message of peace reflects a broader change in tone following years of military campaigns in Syria, Libya and Iraq.

Turkey’s involvements have caused frustration in Arab countries, including the United Arab Emirates, Egypt and Saudi Arabia, which support the opposing side in Libya.

Turkey’s relations with the West, including France and the United States, were further hampered by Ankara’s search for energy in disputed eastern Mediterranean waters.

Tensions have dissipated somewhat since Turkey withdrew a research vessel from the region, restarting talks with Greece for the first time since 2016, although Athens on Wednesday once again condemned Ankara’s "aggression”.

The conciliatory steps improved Turkey’s investment climate and helped the lira, which rallied after losing nearly 30 per cent of its value last year.

But the Turkish currency plunged by as much as 14 per cent this week after Erdogan sacked the central bank governor, who tried to tame inflation by raising interest rates.

Although Erdogan subscribes to the unconventional theory that high rates cause inflation rather than acting as a brake, he sought to reassure investors in his first comments since the lira’s fall.

"The fluctuations in the markets in the past few days absolutely do not reflect the Turkish economy’s fundamentals, real dynamics and its potential,” he said.

He also urged Turks to invest their gold and foreign currency holdings in "various financial mechanisms so that they can benefit our economy and production”, echoing a call he made during a currency crisis in 2018.