ISTANBUL (Reuters) – Turkish President Recep Tayyip Erdogan said on Friday that Turks should keep all their savings in lira and that recent fluctuations in exchange rates were largely under control after the lira weakened sharply in the past two months.
“I want all our citizens to keep their savings with our own money and run all their businesses with our own money, and I recommend that,” Erdogan said in a speech in Istanbul.
“Let’s not forget this: As long as we don’t take our money as a standard, we are doomed to sink. The Turkish lira, our money, that’s what we’re going to do with it. Not with this foreign currency, that’s foreign currency.”
Addressing a business group, Erdogan also called on Turks to bring their gold savings into the banking system and reiterated his unorthodox view that interest rates are the cause of inflation.
“For some time now, we have been waging a battle to save the Turkish economy from the cycle of high interest rates and high inflation, and we are taking it on the path of growth through investment, employment, production, exports and the current account surplus,” he added. The chief said.
“Interest rates are going down, interest rates are going up. Friends, let’s get this off our books. Interest rates are making the rich richer and the poor poorer.”
Turks’ profits have been eroded in recent months by the lira’s collapse, although it rebounded from an all-time low of 18.4 against the dollar last week after the introduction of a government scheme to protect domestic deposits from currency depreciation losses against hard currencies.
The coin TRYTOM=D3 was at 13.295 at 0943 GMT, still down more than 40% this year, and is the worst performer in emerging markets.
The lira crisis was triggered by the central bank’s steep cuts in interest rates, which have reached 500 basis points since September, carried out under pressure from Erdogan in an effort to boost credit and exports.
(Reporting by Eiji Toksabai and Tuvan Gumruko; written by Darren Butler and Jonathan Spicer)