Turkey is pleased with the easing of volatility in foreign exchange rates, President Recep Tayyip Erdoğan said Tuesday, also stressing that the government was working on new steps to increase interest in the Turkish lira.
“We are quite pleased with the easing of foreign exchange rate volatility and the continuation of stability,” Erdoğan told reporters aboard the presidential plane on the return flight from an official visit to Albania.
Erdoğan also noted the interest by households in the scheme that safeguards lira deposits against volatility in the foreign exchange rates.
The president unveiled the deposit scheme on Dec. 20 after the lira fell to a record low of 18.4 to the United States dollar, before rebounding sharply to just over 10 and then settling at current levels just under 14 to the United States currency.
The rebound came after Erdoğan unveiled the initiative to encourage savers to convert foreign exchange deposits to the lira, under which the state compensates depositors for losses in value due to lira depreciation.
As of Friday night, more than TL 131 billion ($9.68 billion) has been deposited in the lira accounts under the government scheme, Treasury and Finance Minister Nureddin Nebati said on Saturday.
Last week, he had said some 15% of the deposits came from foreign currency accounts, with some 300,000 people participating in the scheme.
“Our additional work is continuing on maintaining stability in financial markets and boosting interest in the lira,” Erdoğan said.
He also noted that interest rates, exchange rates and inflation will gradually fall, stressing that 2022 “will be our brightest year.”
“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,” the president said, repeating his view on the link between rates and inflation.
Turkey's annual inflation surged to a 19-year high of 36.1% in December, the highest annual reading since September 2002, driven by last year’s slide in the lira and rising global commodity prices.
Erdoğan last week pledged to tame the surging consumer prices, stressing that inflation figures were not in line with economic realities in Turkey and he hoped to see the benefits of Ankara’s economic policy in the summer.
Nebati said over the weekend that inflation would peak in January, months earlier than predicted, and start to fall from May, before reaching single digits by the time presidential and parliamentary elections set for mid-2023 are held.
The volatility in the lira came after the Central Bank of the Republic of Turkey (CBRT) slashed its policy rate by 500 basis points to 14% from 19% since September.
The bank is widely expected to hold its one-week repo rate steady at its first Monetary Policy Committee (MPC) meeting of 2022 on Thursday.
The bank said last month it would monitor the impact of recent easing in the first quarter of 2022, which economists took as a signal it would hold in January.
