The current swings in the Turkish lira are temporary, President Recep Tayyip Erdoğan said Friday, stressing that the recent volatility in exchange rates was largely under control.
Addressing an event in Istanbul, Erdoğan said the country was taking measures to prevent volatility in the lira, saying that the national currency would stabilize next week. He also said that he expects normalization regarding price hikes.
Those allured by foreign exchange volatility faced dire results, the president said, stressing that citizens should keep all their savings in the lira.
Erdoğan also called on Turks to deposit their "under-mattress" gold savings in the banking system.
“I want all my citizens to keep their savings in our own money, to run all their business with our own money,” Erdoğan said.
“Let’s not forget this: As long as we don’t take our own money as a benchmark, we are doomed to sink. The Turkish lira, our money, that is what we will go forward with. Not with foreign currency.”
The president on Dec. 20 announced a new scheme to protect lira deposits against currency volatility, a measure designed to make citizens feel safer about holding their savings in the bank.
The scheme effectively ties the value of special new deposits to the United States dollar by promising to compensate for losses incurred from swings in the exchange rate.
The country’s central bank earlier this week said it would also extend an incentive program to people who keep their savings in gold.
The move had reversed the recent lira slide and triggered a historic 50% surge in the lira value in the week through Dec. 24.
The lira stood at 13.3 against the dollar at 8:06 a.m. GMT on Friday, 0.6% weaker than Thursday’s close.
Erdoğan said the government was concentrating all its strength and resources on establishing a new economy focused on employment and stability.
"Our aim is to provide both businesspeople and citizens with a climate of trust and stability," he noted.
Erdoğan also reiterated his view that interest rates were the cause of inflation.
He said that for some time, they have been waging the battle of saving the Turkish economy from the cycle of high interest rates and high inflation and taking it on the path of growth through investment, employment, production, exports and current account surplus.
“Interest rates down, interest rates up. Let us please take this out of our books,” he stressed. “Interest rates are the reason, inflation is the result. Interest makes the rich richer and the poor poorer.”
