Turkey: Lira collapses – politicians advise to save on food

Turkey
Lira collapses – politicians advise to save on food

The Turkish lira has collapsed again. Photo: Lefteris Pitarakis / AP / dpa

© dpa-infocom GmbH

The Turkish lira continues to slide. The renewed break-in took place according to statements by President Erdogan. Meanwhile, AKP politicians are causing a stir with savings tips.

The Turkish lira collapsed on Tuesday, according to President Recep Tayyip Erdogan. It fell to record lows against the dollar and the euro.

Against the dollar, the daily losses were at times ten percent. In return, the dollar rose above 12 lira for the first time. The euro rose to 14.06 lira. Meanwhile, politicians from Erdogan’s ruling party, the AKP, are sparking discussions with savings tips.

The renewed crash of the currency follows Erdogan’s demands for a “competitive” lira. An even weaker exchange rate should encourage investment and jobs. This should further fuel inflation as imported goods become more expensive.

Lost a quarter of its value

In this month alone, the lira has lost around a quarter of its value against the dollar and the euro. Inflation in the country was last at just under 20 percent, which many people complain about. AKP politician Zülfü Demirbag advised citizens to eat only half a month instead of two kilograms of meat. Instead of two kilos of tomatoes, two pieces might be enough. Eating vegetables out of season is not particularly healthy anyway. Earlier this month, Energy Minister Fatih Dönmez advised turning down the heaters to save money.

The central bank had recently lowered the key interest rate after Erdogan’s pressure and thus sent the lira to lows. Erdogan takes the view, contrary to the current doctrine, that high interest rates promote inflation.

The pressure on the central bank is likely to continue. Devlet Bahceli, head of the ultra-nationalist party MHP, called for a discussion on the end of the independence of the central bank. The MHP is part of Erdogan’s government. “Independent institutions cannot stand above the will of the people,” said Bahceli. “Turkey should be free from the interest burden.” He also called for Turkey to oppose the International Monetary Fund and the “interest rate lobby”. The statements are likely to further weaken confidence in the lira and the Turkish economy.

dpa

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