Saturday, January 01, 2022
Citizens should trust currency
Erdogan: “doomed” without a lira
In view of the currency crisis in Turkey, President Erdogan calls on the population to trust the domestic lira again. Savings should be retained and business conducted in local currency. The background to this is a recent rapid drop in the lira.
The Turkish President Recep Tayyip Erdogan has called on the population to hold on to their savings in Turkish lira. “I want all of my citizens to keep their savings in our own currency and do all their business in our own currency,” he said in a speech in Istanbul. “Let us not forget: as long as we do not use our own money as a benchmark, we are doomed to doom. The Turkish lira, our money, is what we will use to move forward. Not with this or that foreign currency.”
Erdogan also called on the population to feed gold savings into the Turkish banking system. “The more of the 5000 tons that are stored under the pillows is brought into the economy, the more we grow stronger as a country and as a people.” According to official data, the citizens of Turkey keep about half of their savings in gold and foreign currencies. The background is inflation – more than 21 percent in November – paired with a loss of confidence in the domestic lira. This lost around 44 percent of its value against the dollar in 2021. It’s the second currency crisis in Turkey since 2018 and the worst drop in a year since the beginning of the Erdogan era nearly two decades ago.
Experts also see the reason for the currency crisis and high inflation in the unorthodox monetary policy of the Turkish central bank. At Erdogan’s insistence, the latter has repeatedly cut its key interest rate, although economists consider an increase to be the appropriate answer. Erdogan reaffirmed the approach: “We fought to save the economy from the cycle of high interest rates and high inflation,” he said. He also used the Koran again to defend his low interest rate policy. Islam forbids very high interest rates or savings and usury, Erdogan said. Scholars, however, are divided on how to formulate a reasonable profit.