SAWT BEIRUT INTERNATIONAL

| 5 December 2022, Monday |

Erdogan says he hopes volatile Turkish lira will steady soon

Turkish President Tayyip Erdogan said on Saturday that he believed unpredictable foreign-exchange and inflation rates would soon settle, and he guaranteed low interest rates once more, following a historic drop in the lira currency to record lows.

The currency has lost over 30% of its value in the previous month, owing to a selloff fueled by dramatic interest rate cuts desired by Erdogan but deemed dangerous by experts and opposition lawmakers due to increasing inflation.

“God willing, we will stabilize all pricing swings and exchange rates in a short period of time,” Erdogan told an audience in the eastern city of Siirt.

“Tayyip Erdogan said low interest rates yesterday, says low interest rates today and will say low interest rates tomorrow,” the president said. “I will never compromise on this because interest rates are a malady that make the rich even richer, and the poor even poorer.”

The currency touched a record intra-day low of 14 to the dollar on Tuesday and logged a record close on Friday, at 13.7485. It is by far the worst-performing currency in emerging markets this year after having shed 45% of its value.

Inflation jumped to a three-year high of 21.3% last month, leaving Turkey’s real rates deeply negative, a red flag for fleeing investors and for Turkish savers who have flocked to hard currencies to protect their wealth.

Despite opposition calls for early elections and a policy reversal, Erdogan has repeated in recent weeks that rate cuts are needed to boost exports, credit, jobs and economic growth.

Under pressure from the president, the central bank has slashed its policy rate by 400 basis points to 15% and is expected to ease policy again this month.

“We will always be there for producers and employers with low interest rates. We’re starting to enforce precautions safeguarding workers against inflation,” Erdogan said.

He said unspecific foreign actors as well as “greedy” businesses that stockpile more goods than needed are in part to blame for some sharp price spikes.

At a separate event in the southern city of Mersin, where crowds called for Erdogan to resign, main opposition CHP leader Kemal Kilicdaroglu said a new government would forgive all interest on loans held by farmers and small businesses.

“He doesn’t need to resign, we’ll send him off anyways,” he said of elections set for no later than mid-2023.

    Source:
  • Reuters