While Turkish President Recep Tayyip Erdogan insists on lowering the country’s interest rates, fear grows in the streets of rising prices and hoarders are causing the closure of some electronics stores.
Go against the grain. Turkish President Recep Tayyip Erdogan caused economic chaos in his country after declaring interest rates “enemies” and invoking a “war of economic independence” that has caused the worst fall of the lira, its official currency.
This Wednesday, the currency, which has lost up to 45% of its value this year, recovered up to 7% as volatility and rising prices continue to worry consumers and investors.
Bankers said liquidity had been depleted, and that the drop to Tuesday’s record low was due to panic dollar purchases. Inflation hovers around 20% and many residents fear that the rise in prices will accelerate, so many crowded gas stations this Wednesday.
“This is the ridiculousness of Turkey. I need to buy gasoline. I need to hit the road, but look at this situation. This is the state that people have been taken to. This is absolute ridiculousness, nothing more,” said Ibrahim Ozturk, a upset resident.
Others demonstrated in some parts of the country, symbolically burning dollars and rejecting the government’s economic measures. The opposition accuses Erdogan of dragging the country into disaster.
The Central Bank assured yesterday that it would only intervene when there are conditions of “excessive volatility.” Banking sources told Reuters news agency that officials from the central bank, Turkey’s banking watchdog BDDK, would meet with the board of Turkey’s banking association on Thursday.
“At the current exchange rate, official inflation could exceed 30% in the coming months. At the current deposit rate, this means a real interest rate of -15%,” Hakan Kara, former chief economist, wrote on Twitter. of the Central Bank, adding that “if measures are not taken urgently, the financial system will not be able to cope with this.”
The Central Bank cut interest rates a total of 400 basis points since September, leaving yields deeply negative, while the rest of the world’s central banks have done the opposite to curb the global inflationary trend.