Cemil Ertem, President Recep Tayyip Erdoğan's senior economic advisor, said that the dollar-Turkish lira exchange rate is over-valued and offers an advantage to Turkish importers. In statements broadcasted on TRT News, Ertem also said that the Turkish central bank needs to take "brave" steps regarding the interest discount and the word "radical" was open for discussions.
"We predict that the U.S. will not rapidly raise interest rates in 2016. Accordingly, the current exchange rate of the dollar is convenient for industrial organizations with a short position in stock. These companies can benefit from this process," Ertem said. When asked if he thought the dollar was at the base rate of 2.85, Ertem agreed it was. He continued: "The Turkish Lira is maintaining its strong stand against the dollar and offers an important advantage for companies with short positions, as they can benefit from this. It is lower than the normal level regarding the Turkish Lira's power. Similarly, the situation offers an important advantage and opportunity for the central bank's interest discount." Ertem added that the central bank should take advantage of the situation and take steps in order to pave the way for Turkish industrial organizations and exporters. Predicting that the issue of the interest rate would soon come up in parallel with the change at the central bank, Ertem said: "Yesterday, our economy minister said that the central bank needed to radically reduce interest rates, and it was a really important opportunity. I agree that the word ‘radical' is open for discussions, of course, as are the rate, amount and the future steps."
According to Ertem, the interest debate is really a political discussion about whether the Central Bank of the Republic of Turkey (CBRT) can put forward a monetary policy framework that can support growth while solving inflation problems and also raise the export, industry and real sector. Ertem previously said that the CBRT needed to better support the economy, and it was more appropriate to discuss how a monetary policy stand that could support the economy would take form rather than arguing over who would be assigned the new CBRT governor after the current head, Erdem Başçı's term ends.