Published On: Thu, Jan 27th, 2022

Turkish Lira COLLAPSE: Erdogan panics and tells Turks don’t put your money in banks | World | News

President Recep Tayyip Erdogan told citizens not to put their money in private banks, arguing they demand a higher interest rate for consumer loans than the Central Bank. On the day of his comments, Turkey’s lira traded weaker, at 13.62, against the US dollar – down from a close of 13.5690 on Wednesday.

In an interview on broadcaster NTV, he said: “We see that private banks are still in an effort to continue this wheel of exploitation.

“I call on my citizens. I tell them to go to public banks. Do not get into such a wheel of exploitation.”

It comes at a time when surging prices are a focus of market attention in Turkey.

The Central Bank released its quarterly inflation report at a presentation by Governor Şahap Kavcıoğlu on Thursday.

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The year-end inflation forecast showed upwards results for both 2022 and 2023 while keeping its medium-term target at five percent.

Annual inflation is projected to hit 23.2 percent by the end of 2022, revised up from 11.8 percent in the previous report, Mr Kavcıoğlu said.

The annual inflation rate stood at 36.08 percent in December.

Turkish Finance Minister Nureddin Nebati last week said lowering inflation is one of his ministry’s priorities, as confirmed by four participants of a conference held on Saturday.

The government’s recent actions to calm the lira crisis have helped the currency recover from a steep dive to 18.4 per dollar in December to a tighter range around 13.5 per dollar in January.

Last week, Mr Erdogan was reported as saying by the state-owned Anadolu news agency: “Slowly, in a gradual way and without haste, the lira will get firmer, interest rates will fall in the same way, and 2022 will be our brightest year.

“We are quite pleased with the lessening volatility in the exchange rate.

“Our additional work is continuing on maintaining stability in financial markets and boosting interest in the lira.

“I take the view that interest rates are the cause and inflation the result. This result indeed is showing itself: inflation is on the verge of falling.”

Erdogan’s view on the link between rates and inflation has often been described as damaging to the cost of borrowing money.

Earlier this month, addressing the Turkish parliament, he said the link between interest rates and inflation has long been disregarded in some other countries, adding he was protecting the country’s economy from attacks by “foreign financial tools that can disrupt the financial system”.

He said: “The swelling inflation is not in line with the realities of our country.”

His message was defined by critics as a push-back for foreign investors as it suggests Turkey does not need their capital.

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