Erdoğan rules out agreement with IMF, confident that lira will gain value

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Turkey will never leave its political and economic future to the "prescriptions" of global economic institutions like the IMF, President and Justice and Development Party (AKP) Chair Recep Tayyip Erdoğan has said.

"Turkey will never again submit its political and economic future to the prescriptions of global economic tutelage institutions, such as the IMF and similar institutions," Erdoğan told his party's parliamentary group today (December 1).

The president's remarks come as the Turkish lira plunges, losing 29 percent in value in a single month.

Ruling out increasing interest rates to bring foreign exchange rates under control, which he called "a system of exploitation that would never return to Turkey," Erdoğan said, "Our aim is to build an economic structure that will produce more, earn more, and transfer what it gains to areas that will benefit the whole nation and increase welfare and hope."

Recent jumps in inflation and losses in the value of the Turkish currency, the lira, have led opposition parties to slam the government over its economic policy, including interest rate cuts.

The "new economic model"

Erdoğan has said the rate cuts were part of his "new economic model" and a "war of economic liberation" for Turkey.

"Interest rates are the reason, inflation is the result," Erdoğan has argued repeatedly, pledging that his policies will lead to high growth and broad-based prosperity.

The Turkish president urged calm among the public, asking them "not to stray from common sense" when buying foreign currency, setting prices, and shopping.

Erdoğan also promised additional measures to help low-income citizens "whose purchasing power has decreased."

Central Bank intervention

On intervention by Turkey's Central Bank earlier today, Erdoğan said the bank's authority to take such action as "it is governed by its own law."

"It has such a right when such a thing is necessary. The Central Bank makes such interventions and has the right to do so," he said.

Turkey's Central Bank said it has intervened in the market via selling transactions due to "unhealthy" price formations in exchange rates, according to a statement by the bank.

The announcement came amid fluctuating foreign exchange rates.

Following the move, the Turkish lira gained 6.27 percent against the US dollar, reaching 12.65 after a historic low of 14.05

The Central Bank made its last direct foreign exchange intervention in January 2014 with a sale of 3.15 billion billion dollars. (AS/VK)