© Reuters
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The Turkish lira marked one of the worst days in its history after President Recep Tayyip Erdogan vowed to win his economic “war of independence” amid continuing devaluation against the dollar.
The last time the pound suffered so much was in 2018, when Turkey’s first modern currency crisis began.
The reason for the loss in value of the pound is largely the policy of the Turkish central bank, which reduces leading interest rates at a time of inflation because of Erdogan’s view – disputed by most economists – that high interest rates lead to inflation, not vice versa.
A sharp dip in the value of the Turkish lira to the US dollar has pushed out people in Ankara onto the streets to demand that the ruling AK party resign. pic.twitter.com/OfpF4oIRWq
– Arwa Ibrahim (@arwaib) November 23, 2021
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As a result, residents of Ankara (and according to c. “One Day” – and Izmir) began to gather in the streets to express their dissatisfaction and demand the resignation of the ruling Justice and Development Party. “Duvar” reports and for demonstrations in Istanbul – still small and scattered, but in different parts of the city, in Kadıköy, in Kurtulus, in the area of famous universities.
Last week, the central bank cut interest rates again at a time when the pound had lost more than a quarter of its value since the beginning of the year. Erdogan had signaled that he wanted the process to continue. As a result, after staying above the psychological threshold of 10 per dollar for more than a week, she skipped 11 for a dollar after the decision of the bank.
In the afternoon, the Turkish currency reached 13.45 per dollar, and by the end of the evening rose to 12.86. Thus, it depreciated by 45% since the beginning of the year and by 26% – only since the beginning of last week.
Erdogan insisted on Monday that he could not adopt policies that “shrink the country, weaken it, doom our people to unemployment, hunger and poverty.” This was among the factors affecting the pound.
Prices are rising too fast
Erdogan insists he wants to boost exports, investment and jobs. However, living standards are collapsing and the opposition is demanding early elections, arguing that many do not have enough money to survive. Reuters quoted talks with Turkish residents as explaining that the currency crash was eating away at their family budget and changing their plans for the future.
“Prices are rising too fast. I don’t want to buy certain products because they have become too expensive,” said Kaan Ajar, 28, a hotel manager in southern Turkey. He explains to the agency that he intends to cancel a trip abroad due to rising prices.
“It is the fault of President Erdogan, the Justice and Development Party government and those who have been pretending not to notice and support them for years.”
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director at a hotel in southern Turkey
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About the dimensions of the crisis read here.
Turkey’s central bank defended its decision today. Following a meeting with its manager, Shahap Kavjooglu, the Anatolian Agency quoted the institution as saying that pricing in the foreign exchange market was “unhealthy”, unrealistic and contrary to economic theory. However, one of her fired deputy governors called for swift action to protect the pound a month after he was fired.
Erdogan was backed yesterday by his de facto coalition partner in the Nationalist Action Party, Devlet Bahceli, who said there was no alternative to an investment-focused policy.
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