Turkish President Recep Tayyip Erdogan called on Turkey’s citizens to convert their dollar and euro savings into lira, as he sought to bolster the ailing currency which has lost some 20 percent of its value against the U.S. currency this year. Erdogan’s call comes also amid rumors about upcoming capital controls.
“My brothers who have dollars or euros under their pillow. Go and convert your money into lira. We will thwart this game together,” Erdogan said at a rally ahead of parliamentary and presidential elections on June 24.
The presidential elections will be critical for Turkey as the executive presidential system approved by the constitutional amendments will be fully in effect after the president is elected.
Less than a month ahead the elections, the Turkish economy is struggling.
The Turkish Central Bank decided to raise the top interest rate 300 basis points to 16.5 percent in an emergency meeting on May 23, after the Turkish Lira’s daily depreciation of 5 percent against the United States dollar. The dollar/lira rate hit an all-time high, reaching 4.93 hours before the bank raised interest rates.
One dollar had traded for 3.65 liras on average in 2017.
After the rate hike decision, the lira gained strength to 4.55 against the dollar but weakened to near 4.8 on May 24.
The lira has lost more than 20 percent of its value against the dollar since the start of the year.
Concerns about management of the economy and the independence of the Central Bank after the elections on June 24 are said to be affecting the depreciation of lira, alongside high inflation, a rising current account deficit, and the rally of the dollar.
The latest decline of the TL set off, when Erdogan revealed beginning of the week his intention to take even greater control of the Central Bank if he wins the election to a new, more powerful presidency.
Prompt was the reaction of the International Monetary Fund with Managing Director, Christine Lagarde, urging Erdogan to preserve the independence Turkey’s Central Bank.
Similar was the respond by the head of the Bank for International Settlements, Agustin Carstens.
In an effort to mislead his own people from the real economic problems of Turkey and the famous “construction bubble”, its President make use of the usual Turkish tactic: conspiracy theories and the foreing powers that want to destroy the country.
Erdogan’s chief economic advisor Yigit Bulut described the plunge of the Turkish Lira as part of a Christian crusade against Turkey. This Christian ‘plot’ targets the financial markets, and it is the same crusade laying behind US President Donald Trump’s Jerusalem move, Bulut claimed and named “Us, UK and Israel targeting the economy of Turkey.
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I wonder if Erdoğan is going to convert all his foreign exchange and bank accounts into Lira. The people must always pay the price for the incompetence of bankers, economists and politicians.