Wednesday, March 22

Erdogan sounds the alarms and urges the Turks to convert their savings into lira to save the currency

The president of Turkey, Recep Tayyip Erdogan, has once again asked his countrymen to bet on the national currency on Tuesday and has urged the Turks to convert their savings into lira to avoid total collapse.

Erdogan explained that 163,000 million liras (about 10,750 million euros) have been deposited in accounts under the government scheme “that protects lira deposits from currency depreciation.”

The year-on-year rate of inflation in Turkey shot up last December to 36.08%, 14.77 points more than that registered last November and the highest level in 19 years. With this, in 2021 the Turkish lira registered its worst year in the last two decades, with a loss of value close to 45%.

This sharp rise also collides with the drop in interest rates that Erdogan is imposing on the central bank. The leader maintains that the cut in the price of money will reduce inflation, a theory rejected by most economists.

Interest rates are currently in Turkey at 14%, after several cuts applied during 2021, with which the acceleration of inflation leaves real interest rates in negative territory, at -22.08%, the lowest level among emerging countries.

In this context of high inflation and extreme weakness of the Turkish lira, BBVA decided in 2020 to strengthen its commitment to Turkey with a takeover bid to reach the entire capital of its subsidiary Garanti, which has also taken its toll on the bank’s share price.