The weakness of Turkey’s currency is “in no way” a true reflection of the current status of the economy, President Recep Tayyip Erdoğan has said, hailing the country’s high growth trend.
Speaking at the Turkish Academy of Science (TUBA) awards ceremony, held at his presidential complex in the capital Ankara on Dec. 12, Erdoğan praised Turkey’s economic growth figures.
“I believe we will likely reach an annual growth rate of 7.5 percent by the end of the year,” he said.
His remarks come a day after the Turkish Statistical Institute (TÜİK) reported that Turkey became the fastest-growing economy among G-20 countries in the third quarter of the year after hitting 11.1 percent growth.
Second-quarter growth was revised up to 5.4 percent from an initially reported 5.1 percent, while first-quarter growth was also slightly revised up, to 5.3 percent.
Erdoğan said that as a result of these figures the high foreign exchange rates against the lira were “not in line with Turkey’s economic realities.”
“I believe that the foreign exchange rates will find the right balance soon,” he added.
The lira has lost 13.5 percent of its value against the dollar since September. The lira hit a record low of 3.97 against the greenback last month. It has slightly recovered since then and was trading at 3.83 to the dollar on Dec. 12.
Erdoğan also returned to the theme of interest rates, saying it is “useless” to attempt to legitimize pressure to hike interest rates through short-term manipulations.
He reiterated his claims about the link between interest rates and the inflation rate, arguing against conventional economic theory that inflation cannot fall in a country with high interest rates.
Inflation hit its highest level in 14 years last month, surging by an annual 12.98 percent as transport and food costs spiked, official data showed.
“I am against high interest rates. I will continue to announce this,” Erdoğan said.
“It is impossible for inflation to decrease in a country with high interest rates. Record this in your memory,” he added.
His words came two days before a key Central Bank meeting on interest rates. At its latest meeting in October the Bank said it was keeping monetary policy tight until prospects of an easing of inflationary pressures become clear, after keeping all four of its policy rates on hold in line with market expectations.
For the fourth consecutive meeting, the Bank left its late liquidity window, the highest of several instruments it uses to set policy, at 12.25 percent and its benchmark repo rate at 8 percent.