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Erdogan says he hopes volatile Turkish lira will steady soon

EconomyDec 04, 2021 09:25AM ET
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2/2 © Reuters. FILE PHOTO: Turkish President Tayyip Erdogan speaks during a news conference after his meeting with German Chancellor Angela Merkel (not pictured) at Huber Mansion in Istanbul, Turkey October 16, 2021. REUTERS/Murad Sezer/File Photo 2/2

By Azra Ceylan

ISTANBUL (Reuters) -Turkish President Tayyip Erdogan said on Saturday he hoped that volatile foreign-exchange and inflation rates would stabilise shortly and he again promised low interest rates, after a historic plunge in the lira currency to record lows.

The lira shed some 30% over the last month in a selloff driven by aggressive interest rate cuts that Erdogan sought, but that economists and opposition politicians say are reckless in part due to soaring inflation.

"God willing we will stabilise all fluctuations in prices and forex rates in not such a long 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.

Erdogan says he hopes volatile Turkish lira will steady soon
 

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Comments (6)
Vincenzo Tilotta
Vincenzo Tilotta Dec 04, 2021 1:09PM ET
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The US is in exactly the same situation, government blaming producers for the inflation that was actually caused directly by the Fed
Jan Buyle
Jan Buyle Dec 04, 2021 11:40AM ET
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It will as soon as he leaves...
Edward Chong
Edward Chong Dec 04, 2021 11:40AM ET
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yes 1000%.
Usman Ali
Usman Ali Dec 04, 2021 11:07AM ET
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I don't disagree with him keeping low interest rates. the fundamentals of Turkish economy haven't changed. Lira is just heavily shorted for ideological reasons.
Investor Btc
Investor Btc Dec 04, 2021 11:07AM ET
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I dont know if you know that. But there is a official CPI in turkey of 21%, with a interest rate cut to 15%. The real rate is like -6%. And thats based on the official CPI, the real inflation is like 40-50% YOY. Before they can cut the interest rates, they first need to get the inflation down. Then you need to raise the rates and not lowering the rates. At the same time the turkish government and central bank lost there credibility. In 18 months Erdogan fightered 3 central bank governers and 3 minister of finance/treasury.
Matt Brackley
Matt Brackley Dec 04, 2021 11:07AM ET
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Investor Btc all fired were US plants.
New Jazenevd
New Jazenevd Dec 04, 2021 9:52AM ET
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Fascist governments love high inflation. It makes ordinary folks more dependent on rulers.
Vincenzo Tilotta
Vincenzo Tilotta Dec 04, 2021 9:52AM ET
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Exactly what is happening in the US
Grab My Grape Sack
Grab My Grape Sack Dec 04, 2021 9:31AM ET
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lol he hopes. I hope Musk, Bezo, and Gates work for me.
taylor jason
taylor jason Dec 04, 2021 8:58AM ET
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quick someone get this guy a 101 macro textbook!
 
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