Turkish government pledges to boost pound amid currency crisis

Erdoğan faces increasing domestic pressure amid soaring inflation

The ailing Turkish lira was bolstered on Tuesday by government pledges to protect savings from the currency crisis that has dented the country’s president’s popularity.

Turkish President Recep Tayyip Erdoğan said the government would guarantee lira savings to encourage people to keep the local currency rather than exchanging it for a more stable foreign currency.

The main opposition party, the Republican People’s Party (CHP), said the government did not have the resources for such guarantees.

The lira has lost over 40% of its value this year and the reported inflation rate is over 20%; the opposition has argued that it is way above that.

Polls have shown a gradual decline in the popularity of the Turkish president and his party, the Justice and Development Party (AKP), as opposition parties have stepped up their cooperation, perhaps creating a greater threat. for future ballot boxes.

Voters’ decision is not based solely on [the] economy. It is also an emotional decision defined by identity and belonging

However, Can Selçuki, who heads polling firm Türkiye Raporu, said the opposition had failed to change sides among AKP supporters and believed they might have been scared off by more aggressive opposition. .

Selçuki told The Media Line that his poll showed a recent slight increase in support for Erdoğan’s AKP.

“The decision of the voters is not only based on [the] economy. It is also an emotional decision defined by identity and belonging. As the opposition becomes more aggressive, the CHP leader in particular, it is reasonable to expect some disgruntled AKP voters [who] join the undecided, come back and support [the] AKP, ”said Selçuki.

However, he questioned the sustainability of increasing support for the AKP as the economy continues to struggle.

“With inflation, it’s going to become more difficult to get by,” said Selçuki, who is also an Istanbul-based economist.

Much of the economic crisis has been blamed on the unorthodox policies Erdoğan championed, including keeping interest rates low in the belief that this will boost economic growth.

However, economists argue that interest rates must rise to stop inflation from rising.

The government argued that a fall in the Turkish currency would boost its exports by making them cheaper.

Selçuki said this would only benefit a minority of Turkey’s exports, while most would be negatively affected by rising import prices.

Foreign investors, on whom Turkey relied largely for its economic growth, worried about the central bank‘s lack of independence, which has seen several governors and policymakers sacked.

The pound also suffered a significant drop after Erdoğan appointed his son-in-law as finance minister in 2018.

That same year, Turkey faced yet another currency crisis after the United States imposed sanctions over the detention of an American pastor.

The financial fallout was partly blamed on the loss of Erdoğan’s party in local elections in Istanbul and Ankara.

The Turkish president was previously credited with overseeing years of economic boom and development for the country.

However, his recent unorthodox policies, coupled with increasingly centralized power, have angered many in the country, including some who were once close to him.

Its former finance minister, Ali Babacan, left the AKP to form his own party and the recent crisis has raised hopes in the opposition that Erdoğan will not hold power beyond the elections scheduled for 2023.

There has been a lot of speculation that the vote will take place sooner, a move desired by some members of the opposition.

The economic situation is a problem common to all segments of the political spectrum in Turkey

Ilke Toigür, a member of the German Institute for International Security Affairs focused on Turkey, was skeptical about this because there is currently no advantage for the AKP to do so.

“There’s still a year and a half and that’s a very long time in Turkish politics,” she told The Media Line.

Toigür added that the biggest impact of the economic crisis has been to bring together polarized groups as they feel the effects of the fall in the pound and the rise in prices.

“The economic situation is a problem common to all segments of the political spectrum in Turkey,” Toigür said.

Toigür said she believed the government was basing its hopes on a boost to the economy this summer, in the hopes that a weaker pound would benefit the crucial tourism industry.

Questions remain as to why the government has held firm on policies that have so severely damaged the currency.

Erdoğan’s influence in government increased dramatically after a slim victory in a 2017 referendum that abolished the post of prime minister and centralized power around the president.

“[The] the presidential system… is more and more personalized. And then you are just guessing why a leader follows such a policy even if it is highly unorthodox. I guess they just want to try something different.

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