By Le Figaro with AFP
–President Recep Tayyip Erdogan tried to reassure markets on Friday as the Turkish lira, which has been in free fall for several months, hit a new all-time low against the dollar this week. “I am convinced that the Turkish lira will stabilize. These things are temporary, variations are happening all the time», Declared the Turkish president during a press conference in Istanbul. The Turkish lira, which has depreciated nearly 20% against the dollar since the start of the year, hit its all-time low on Thursday, trading near 7.3 against a greenback. After recording a further decline on Friday morning, the pound picked up again in the wake of Recep Tayyip Erdogan’s statements and traded at 7.22 against the dollar around 13:00 GMT. “Turkey is standing. Let no one try to mislead our people», Launched the head of state. “We continue our journey by strengthening ourselves“, he added.
The erosion of the pound can be explained in particular by the concerns of the markets about the melting of the foreign currency reserves of the Turkish Central Bank, which has spent lavishly in recent months to support the national currency. It also illustrates the growing mistrust of economic governance, due in particular to the continuous fall in the central bank’s main key rate over the past year, while economists on the contrary urge it to raise it in order to tame inflation. The depreciation of the pound has also sparked criticism and worried comments on social networks. It also heightened concerns about the capacity of the Turkish economy to recover from the Covid-19 pandemic, which struck as the country was barely recovering from its first recession in a decade. In addition to fueling inflation, the weakening pound is indeed adding to the already overwhelming burden of foreign currency denominated debt that weighs on many Turkish companies.
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