Turkish lira hits new record low after Erdoğan reiterates his inflation-interest rate theory

Photo: AA

Click to read the article in Turkish / Kurdish

The Turkish lira hit a new record low against the US dollar and the Euro after President Recep Tayyip Erdoğan's remarks about interest rates and inflation today (November 17).

Markets perceived the president's statements as a signal of a new interest rate cut ahead of the meeting of the Central Bank Monetary Policy Committee tomorrow.

The USD/TRY rate surged to 10.48 and the Euro/TRY rate surged to 11.85 shortly after Erdoğan's speech whereas they were 10.38 and 11.70, respectively, before he spoke.

Addressing his Justice and Development Party's (AKP) parliamentary group, the president once again backed his unconventional theory that high interest rates cause high inflation.

"I'm saying this very clearly: The interest rate is the cause and inflation is the result," said Erdoğan. "We'll save this nation from the menace of interest rates."

"No offense to our friends whom we walked together in this struggle; I can't be together with those who defend interest rates.

"This is not an ordinary matter. Let's look at the world. Look at America, look at the West, look at Israel. While all of these have lowered interest rates, how can our friends come to defend interest rates?

"... On the other hand, we say to businessmen, 'You were asking for loans with lower interest rates. Just get it now, why don't you? ... Take out loans and make investments. I want investments, employment, production, exports from you ... But they run away. What kind of businessmen are they?" (HA/VK)