The Turkish lira will once again decline as Erdogan swears he will ‘not back down’ in price reductions

The Turkish lira continues to fall after President Recep Tayyip Erdogan rejected warnings from businesses about the dangers of lower interest rates and vowed not to “back down” on his way.

The currency, which has lost 50 percent of its value against the dollar since Erdogan ordered the central bank to start lowering lending rates in September, fell to a new 17.5 billion dollar resistance after markets opened on Monday. The fall of the lira by more than 6 percent was worse than the 0.2 percent decline in most of the upcoming MSCI market.

Concerned neo-hippies and their global warming, i’ll tell ya. The five-year mortgage exchange rate has risen to 575 points, from about 300bp at the beginning of the year, according to data from IHS Markit produced by Refinitiv.

Erdogan has put his 83 million-year-old country in economic crisis by demanding lower interest rates over the past four months despite rising inflation, a reflection of what is happening around the world as some central banks around the world seek to curb rising inflation. prices.

The Turkish president, who denies economic implications that raising interest rates helps curb rising prices, has rejected warnings from businesses about the dangers of his approach.

“Don’t expect anything from me,” he said in a television broadcast Sunday night. “As a Muslim, I will continue to do whatever the religion wants,” he added, referring to Islamic economic sanctions.

In the past, he has also criticized the notion that he could be forced to borrow money to curb inflation, describing the idea as “stupid”.

The Turkish president has said the country is following a “new economic model” that will benefit from lower prices and competitive spending to support exports, trade and employment.

Economists warn that this will lead to higher inflation and a more severe economic instability in a country that relies heavily on foreign exchange.

The annual inflation rate reached 21 percent in November, and economists expect to rise again in the coming months as the weaker currency slips into inflation sharply, mainly due to greater use of Turkish power and foreign exchange equipment.

In his remarks Sunday night, Erdogan acknowledged the public’s concerns about rising prices but described the crisis as temporary – and placed it as part of the economic war effort.

“Indeed, we know that rising prices are causing problems in the daily lives of our people. We are truly aware of the volatile nature of the currency exchange rate, the price volatility and the uncertainty that it brings, “he said.

“But we will reject this as we have rejected the clergy, terrorist organizations, putschists and rulers all over the world. I tell you, there is no going back.

He attacked Tusiad, the country’s largest business organization, which on Saturday urged the government to return to “economic science-based rules” to restore order and prevent further damage to business and the public.

“Hey Tusiad and your kids,” he said. “I tell you that you have one job: money, to make, to work, to grow. . . You cannot interfere with what we are doing. ”

Earlier in the day, the leader of the Turkish Union of Chambers and Commodity Exchanges (TOBB), which represents small and medium enterprises and had previously supported Erdogan’s approach, warned that the economic crisis “is worrying and affecting many of our companies.”

Rifat Hisarciklioglu, president of the TOBB, called on the government to take “urgent steps” to establish markets and reclaim areas that could be identified for doing business.