After the lira depreciated dramatically in the last two months, President Tayyip Erdogan stated on Friday that Turks should preserve all of their money in lira and that recent exchange rate volatility was largely under control.
“I want all of my compatriots to store their savings in our own money and to run all of their businesses with our own money,” Erdogan stated in an Istanbul speech.
“Let’s not forget: we’re bound to collapse as long as we don’t use our own money as a yardstick. We shall proceed with the Turkish Lira, which is our currency. Another’s not the case with this or that foreign currency.”
In a speech to a business group, Erdogan urged Turks to deposit their gold savings in banks and reaffirmed his unconventional opinion that interest rates are the cause of inflation.
“We’ve been fighting for a long time to free the Turkish economy from the cycle of high interest rates and high inflation, and to put it on a road of growth through investment, employment, production, exports, and a current account surplus,” the president stated.
“Interest rates have gone up and down. Please, my friends, take this out of our books. Interest rates enrich the wealthy while impoverishing the poor.”
The lira has rallied from an all-time low of 18.4 against the dollar last week after the establishment of a state scheme to protect local deposits from devaluation losses vs hard currencies, while Turks’ wages have been reduced in recent months due to a drop in the currency.
TRYTOM=D3 was trading at 13.295 at 0943 GMT, down more than 40% this year and by far the poorest performer in emerging markets.
The lira crisis was sparked by the central bank’s aggressive interest rate cuts, which totaled 500 basis points since September and were implemented under Erdogan’s urging in order to encourage credit and exports.