© Reuters. New low of the lira as Erdogan lashes out against the price rise
Istanbul, Nov 22 (.) .- The Turkish lira marked a new record low on Monday when it was exchanged for 12.86 units for euros during an appearance by Turkish President Recep Tayyip Erdogan, who promised to “crush those who raise prices with pretexts false “.
After today’s cabinet meeting, the president defended in a speech, broadcast live on the NTV network, his economic policy of keeping interest rates low to create jobs.
Erdogan celebrated the decision of the Central Bank, last Thursday, to lower rates from 16% to 15%, well below inflation, which is currently close to 20%, a gesture that that day caused a fall of more than 5% in the lira against the dollar and euro.
“Either we gave up growth, production and employment or we continued the fight. As always, we choose to fight. We see a game of currency and interest rates, but we play our own game,” the Turkish president said today.
Lowering rates facilitates spending, but triggers inflation, devalues the currency and makes imports of raw materials, vital for the Turkish manufacturing industry, more expensive.
The 20% loss in the value of the lira since the beginning of October has accelerated the rise in prices, with some Istanbul shopkeepers claiming that they must change labels “daily” because even local products depend on the foreign exchange market.
But Erdogan sought the blame in an “international mandate” of economists who “want to belittle” Turkey.
“We will have no compassion for those who use the rise in exchange rates to raise prices exorbitantly for no logical reason. We will crush them all!” He promised.
While the head of state spoke, the lira, which had hovered around the 12.7 units per euro mark since Thursday, began to fall, losing another 1.8% in about 20 minutes, to stabilize at 12.85 lira per euro and 11.4 per dollar.
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