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Lira keeps falling: Turks are now taking to the streets - and Erdogan is hoping for an oil state

2021-11-24T10:58:36.928Z

Erdogan's demand for low interest rates is taking a toll on the Turkish economy. The lira has now reached an all-time low again. There are protests.



Erdogan's demand for low interest rates is taking a toll on the Turkish economy.

The lira has now reached an all-time low again.

There are protests.

Ankara / Munich - In his almost 20 years as head of government and state, the Turkish President Recep Tayyip Erdogan has repeatedly made an economically strong Turkey his core goal. "Old Turkey" is now a thing of the past, it was said regularly. In the first half of the tenure everything seemed to be going well. According to the state agency Anadolu, the Turkish economy with Erdogan recorded an average annual growth of five percent. IMF debts were paid off, inflation and unemployment fell, while the Turkish lira gained strength. But the tide has been turning for some time, and faster and faster.

Due to Erdogan's demand for low interest rates and generally an economic policy that mostly contradicts current economic theory, the lira is in free fall.

This year alone, the lira lost around 40 percent of its value.

The case last accelerated on Tuesday evening

(November 23)

.

Turkey: Erdogan conjures up an "economic war of independence" - Lira reacts with a severe slump

As so often before, speeches by President Erdogan were the trigger for the current decline in the value of the Turkish lira. In his most recent speeches, he again saw high interest rates as a trigger for the difficult economic situation and not as a remedy for the situation. He welcomed the central bank's decision to cut rates by 100 basis points. He also spoke of an "economic war of independence". The Turkish people will emerge victorious from this war, said Erdogan.

The Turkish president indirectly rejected allegations that he could not handle the economy. "We know very well what we are doing with this approach, why we are doing it, what risks we are facing and what we will achieve in the end," claimed Erdogan. Previously, he also said, using a metaphor, that he had "written the book of economics". His goal is to save Turkey from the "vicious circle" of high interest rates and low exchange rates, which is why a "fight" has now been decided. “Interest is the cause, inflation is the result,” Erdogan added.

However, the lira responded with a mighty slump.

Within just a few hours, the currency lost 18 percent of its value and hit an all-time low against the euro and the dollar.

For the first time in history, one euro cost more than 15 lira, while now you had to pay more than 13 lira for one dollar.

Tuesday was the eleventh day in a row with losses.

It is now the longest minus series in 20 years.

Turkish lira at an all-time low: people are losing confidence - demonstrations against the government

The collapse of the lira naturally affects the financial situation of the citizens. The population complains about high food prices. At petrol stations, for example, prices are also constantly increasing. In the meantime, daily price increases have become the new normal in Turkey. The population is increasingly losing confidence in the local currency, which is why people exchange their money for dollars or buy crypto currencies. The strong fall on Tuesday evening drove many citizens to the streets, mainly in Istanbul and the capital Ankara.

The majority of opposition groups were walking around with posters and pans and ladles - a trend that has been seen regularly at demonstrations against the government, especially since the Gezi protests in 2013. “We don't want to get poorer so that some can get richer” was shouted in the streets. “Enough, our work is stolen” was another slogan of the demonstrators. The police sealed off certain streets and large squares with barriers to prevent major protests. Apparently there were also minor clashes and arrests.

Government-related media and politicians warned against provocations by "members of terrorist organizations".

One has the right to demonstrate, but one must not allow “terrorist elements” to mix in the masses.

There was also criticism of Erdogan on social media, while supporters of the president went on the offensive with the hashtag “I stand by my state”.

More demonstrations are expected in the next few days.

Turkey: Foreign Investment as a Means against Lira Slump?

- Emirati Crown Prince visits Ankara

In the midst of the delicate economic climate, foreign investment could be a lifeline for Turkey. Attracting investors to the country is very difficult when the economy is weak. The IMF is predicting economic growth of almost 10 percent for this year, but from the point of view of European or American investors, the growth will be completely wiped out by the heavy Lira losses.

Support could now come from Abu Dhabi. Emirati Crown Prince Muhammad bin Zayed will

visit Turkey

on Wednesday

(November 24)

, officials told Reuters and Bloomberg news outlets. Previously, relations between the two countries were tense due to regional issues such as the Muslim Brotherhood and the war in Libya. Especially after the US withdrawal from Afghanistan and the US neglect of the Middle East in the face of Chinese challenges, the United Arab Emirates are also looking for new allies against Iran.

Turkey hopes the oil-rich crown prince will not arrive empty-handed.

Most likely, Bin Zayed will make a large amount of investments in Turkey.

This is also shown by the increasing contacts between the economics ministers.

Bin Zayed pledged Erdogan to invest up to $ 100 billion in a phone call, a source for the London-based online portal

Middle East Eye

claimed

.

This could prove to be fresh blood for the Turkish economy.

She urgently needs it.

(bb)

List of rubric lists: © Lefteris Pitarakis / AP / dpa

Source: merkur

All news articles on 2021-11-24

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