Turkey’s main opposition party took aim at the economic policies of President Recep Tayyip Erdoğan after the lira extended a record low late on Wednesday.
Kemal Kilicdaroglu, who heads the Republican People’s Party (CHP), accused Erdoğan of deliberately pushing the maligned currency lower to help industrialists and exporters at the expense of ordinary people.
The lira slumped to as low as 8.96 per dollar after the central bank unexpectedly cut interest rates to 18 percent from 19 percent on Friday even after inflation accelerated to 19.25 percent, the highest level since the aftermath of a 2018 currency crisis.
Erdoğan, who is seeking to boost economic growth and exports through stimulus measures, has sacked three central bank chiefs in under three years. He claims higher interest rates are inflationary.
“The fire of the dollar does not subside. You did this, Erdoğan, on purpose!” Kilicdaroglu said in comments on Twitter. “I don’t understand how a bureaucrat applied this nonsense… Children go to bed hungry in this country, you have no conscience left!”
The lira has lost 16 percent of its value this year, the most among major emerging market currencies. It was trading up 0.2 percent at 8.89 per dollar on Thursday morning.
The lira’s declines have stoked inflation and made imports more expensive. An iPhone 12 with 64GB of memory costs almost 10,000 liras, nearly four times the net monthly minimum wage for a single person. Food prices surged by an annual 29 percent in August and the price of furniture and household equipment climbed by 22.9 percent.
The Institute of International Finance (IIF), the association of the global finance industry, has set a fair value for the lira of 9.5 per dollar.
Hakan Aran, the chief executive officer of İşbank, one of Turkey’s biggest non-government banks, said that the government may be deliberately seeking a weaker currency to encourage exports and the use of local materials in production.
“I think the high dollar exchange rate is a conscious choice in this context,” Aran said in an interview with BloombergHT television. He said the central bank’s monetary policy may be wrong because investors and industrialists want predictability and interest rate cuts now could mean less opportunity to lower borrowing costs in the future.
Aran said Treasury and Finance Minister Lütfi Elvan has told bankers that he wants to see them increase funding for production and exports.
Ahval