The Turkish lira lost about 5 percent of its value against the dollar, touching the record low levels recorded last week when President Recep Tayyip Erdogan affirmed his adherence to his policy of lowering interest rates, considering that Turkey is fighting a “war of economic independence,” despite widespread criticism from the On the part of the opposition, economists and international institutions to insist on moving forward in easing monetary policy despite the fact that the inflation rate remains at about 20 percent.
Erdogan said, in statements yesterday, that the problems caused by the rise in prices that the country is witnessing due to fluctuations in the exchange rate will be addressed through investment, employment and production, considering that these problems have no economic basis.
Erdogan reiterated that he has never, and will never, support raising interest rates, stressing that he has not compromised on this matter. “We will succeed in this matter, and you will see the levels to which inflation will fall before the presidential and parliamentary elections, scheduled for the summer of 2023,” he added.
The Turkish president pointed out that Turkish banks, especially government banks, are ready to provide the necessary support to those wishing to invest, and that his government is working to improve conditions for all segments of society, led by low-income people.
The lira fell to the level of 12.85 pounds to the dollar at the opening of trading, compared to the closing level of 12.25 on Friday. Liquidity was low with an increase in the discrepancy between the buying and selling prices, just as it happened in last week’s trading.
The Turkish lira lost 15 percent of its value, hitting its lowest level in history on Tuesday, when it fell to 13.45 lira to the dollar after Erdogan defended the central bank’s decision to cut the interest rate to 15 percent.
The lira’s losses, which amounted to more than 45 percent of its value, since the beginning of the year, led to a doubling of Turkey’s external debt, and some state-run projects have recently turned into projects with treasury guarantees. Turkey’s foreign debt rose to 2 trillion and 314 million liras, after the rapid collapse of the Turkish lira against foreign currencies.
In an editorial devoted to the recent turmoil in the financial markets in Turkey, the Financial Times attributed the depreciation of the Turkish lira to President Erdogan, pointing out that the only way for Turks to protect savings in these circumstances is to return to the currency that is not under Erdogan’s control.
The newspaper stated that the collapse in the Turkish lira was not due to problems in the country’s economic foundations, as it was in previous years, but rather all currency problems reflect the increasing wrong decisions of one man and his impact on the so-called “Independent Central Bank of the Republic of Turkey.”
Erdogan instructed the Banking Supervision Authority to open an investigation into the reasons for the rapid decline in the value of the Turkish lira against the dollar, and to determine whether there was a possible currency manipulation after the value of the lira fell to record levels against the dollar during the past week.
Erdogan has always blamed the deterioration of the Turkish lira on foreign parties that conspire, from his point of view, on the Turkish economy. He said, last week, that his country is fighting an “economic war of independence”, and will not submit to pressure to change this path, adding, “We are witnessing manipulation around the exchange rate, interest rates and price hikes by those who want to take our country out of the equation.”
Erdogan asked the agency to identify the institutions that have bought large amounts of foreign currency and to determine whether fraud has actually occurred.
The Turkish opposition blames Erdogan for the collapse of the lira, the deterioration of the economy and the standard of living in the country due to his wrong decisions, and pressure on the central bank to continue lowering the interest rate at a time when the inflation rate is rising.
Meanwhile, data from the Turkish Statistical Institute showed that confidence in the country’s economy fell by 2 percent on a monthly basis in November, to 99.3 points.
The index, which indicates optimistic expectations when it is above 100 points and pessimistic when it falls below it, reached a record low last year before recovering with the easing of “Corona” restrictions in the summer. The index jumped above 100 points last July for the first time since May.
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