The Turkish lira rose again on Monday evening, after President Recep Tayyip Erdogan announced new monetary support measures, analysts explained as an indirect rate hike.
The Turkish lira rose about 10% after the announcement of new measures, surpassing the 10% loss in value.
Analysts say Erdogan has indirectly raised interest rates as it succumbed to market pressures and announced a series of complex measures to save the national currency.
These measures also include a new financial instrument aimed at offsetting the decline in the value of bank deposits caused by the depreciation of the lira.
Erdogan did not explain how this tool would work. But Mahvi Egelmaz, a former adviser to the Turkish treasury, described the new measures as an “indirect increase in interest rates.”
The continued fall in the value of the Turkish lira on Monday has prompted traders to break their silence, as usual with caution, demanding that Erdogan reconsider monetary policy.
In view of Erdogan’s commitment to continuing to call for lower interest rates, the Turkish Chamber of Commerce, which represents about 85 percent of export companies, called on him to adjust monetary policy that is pushing the economy and the country into the abyss.
The Turkish lira fell again on Monday morning, losing ten per cent of its value against the dollar, prompting authorities to suspend trading on the stock market for the second time in the afternoon before compensating for some of its losses. Friday.
The Turkish lira continues to fall to record levels, and the exchange rate has crossed 17 lira against the dollar, losing more than 45 percent of its value against the dollar since early November.
The new fall in the local currency comes the day after the head of state’s statements released on Sunday evening – but it was recorded on Saturday – in which he confirmed that he would not raise interest rates to stabilize the exchange rate.
Erdogan attributed his decision to the teachings of Islam, which forbids usury, and said, “As a Muslim, I will do what our religion commands me to do. If God wills, inflation will soon subside.”
Thus, Erdogan is a response to the Turkish Chamber of Commerce, which last weekend appealed to him to move to address the crisis.
“Implemented policy choices have created new difficulties not only for the business world but also for our citizens,” the Exporters Association wrote in an online statement.
“Warnings of a significant decline in the value of the lira, accelerating inflation, pressure on investment, growth and employment and the risks of poverty in our country,” he reiterated.
“In view of this, it is necessary to assess the damage to the economy and return to the economic principles established within the framework of the market economy,” he added.
“Don’t expect anything else from me.”
In response to the call, Erdogan recorded a video aired Sunday evening in which he said, “They are complaining about interest rate cuts. But don’t expect anything else from me.
On Monday evening, Erdogan again attacked the Turkish Chamber of Commerce at a press conference following a government session.
Addressing the assembly, the Turkish president said, “You are plotting to overthrow the government,” and accused the opposition of working with the opposition to hold early elections.
“Your confidence will be shattered,” Erdogan said. They are a dream. You have to wait until June 2023. “
The President of Turkey announced measures aimed at making savings accounts more attractive in Turkish lira compared to accounts in foreign currencies.
With the president pressuring the central bank, which has fired three governors since 2019, to cut interest rates to 14 percent now, the annual inflation rate could reach 21 percent and reach 30 percent in the coming months. According to economists.
But opposition parties accuse the National Statistics Office of deliberately reducing inflation, which has pushed up prices of basic commodities such as sunflower oil by 50 percent in less than a year.
‘Loss of hope’
The Turks are trying to exchange the dollar and gold with their local currency to preserve their purchasing power.
The merchants’ organization condemned the “loss of confidence and instability” and stressed that “the great demand for foreign currencies is blocking other economic balances.”
In Ankara and Istanbul in particular, pictures of long queues in front of bread warehouses backed by opposition municipalities, selling for half the market price of bread, have recently been widely circulated and commented on in Turkey.
In this context, the president raised the minimum wage by 50 percent on Thursday to 4,250 lira (240 euros) from next year.
The Turkish lira has lost more than 57 percent of its value against the dollar since the beginning of January, and this decline has led to an increase in prices, especially as the state relies heavily on imports of raw materials and energy.
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