Ankara – The Turkish lira collapsed, on Tuesday, according to President Recep Tayyip Erdogan. And it fell to record lows against the dollar and the euro. Against the dollar, daily losses were sometimes ten percent. On the other hand, the dollar rose above 12 pounds for the first time. The euro rose to 14.06 pounds. Meanwhile, politicians from Erdogan’s ruling party, the Justice and Development Party, are sparking discussions with saving tips.
The renewed collapse of the currency follows Erdogan’s demands for a “competitive” lira. A weaker exchange rate should encourage investment and employment. This would increase inflation as imported goods become more expensive.
AKP politician: Turks should save up on food and heating
In this month alone, the lira has lost about a quarter of its value against the dollar and the euro. The country’s inflation rate last time was just under 20 percent, which many people complain about. AK Party politician Zelvo Demirbagh advised citizens to eat only half a month instead of two kilograms of meat. Instead of two kilograms of tomatoes, two pieces may suffice. Eating vegetables out of season isn’t particularly healthy anyway. Earlier this month, Energy Minister Fatih Donmez advised turning off heating appliances to save money.
The central bank had recently cut the key interest rate after Erdogan pressured and thus pushed the lira to its lowest levels. Erdogan sees, contrary to current dogma, that higher interest rates boost inflation.
The pressure on the central bank is likely to continue. Devlet Bahceli, head of the ultra-nationalist Nationalist Movement Party, called for discussion of ending the independence of the Central Bank. The MHP is part of Erdogan’s government. “Independent institutions cannot stand above the will of the people,” Bahceli said. He called on Turkey to oppose the International Monetary Fund and the “interest lobby”. This data is likely to weaken confidence in the lira and the Turkish economy.