Turkey's lira logs worst year in two decades under Erdogan

i24NEWS - Reuters

3 min read
A currency exchange office worker counts Turkish Lira banknotes in front of the electronic panel displaying currency exchange rates at an exchange office in Istanbul, Turkey, August 6, 2020.
Yasin AKGUL / AFPA currency exchange office worker counts Turkish Lira banknotes in front of the electronic panel displaying currency exchange rates at an exchange office in Istanbul, Turkey, August 6, 2020.

The Lira currency lost 44 percent of its value against the US dollar in 2021

Turkey's lira logged its worst year since President Tayyip Erdogan came to power nearly two decades ago, despite his appeal on Friday for Turks to trust his unorthodox policies of slashing interest rates in the face of soaring inflation.

The lira — by far the worst performer in emerging markets in 2021, as well as in the last few years — shed 44 percent of its value against the US dollar over the year and 19 percent in the last week alone.

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The currency crisis accelerated in recent months, rattling the $720 billion economy, largely due to Erdogan's "new economic program" focused on exports and credit despite the lira's collapse and inflation of more than 21 percent.

To ease the turmoil, the president unveiled a scheme two weeks ago in which the state protects converted local deposits from losses versus hard currencies, sparking a sharp 50 percent rally in the lira with support from the central bank.

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On Friday, Erdogan called on Turks to keep their savings in lira instead of transferring to euros or dollars.

"I want all my citizens to keep their savings in our own money, to run all their business with our own money, and I recommend this," Erdogan told business leaders in a speech in Istanbul.

The president also urged Turkish citizens to bring their gold savings into the banking system.

Recent polling shows Erdogan's approval ratings slipping ahead of the Turkish general election scheduled to take place in 2023.