euro, dollar, Turkish lira

Turkish lira recovers 50% of its value against the dollar and the euro

Erdoğan announced compensation to lira investors for their losses, leading the Turkish lira to its biggest recovery since 1983.

The Turkish lira managed to recover up to 50% of its value against the dollar and the euro in a historic day, a recovery of the Turkish currency not seen in almost 40 years and that comes after Turkish President Tayyip Erdoğan announced last night a series of economic measures by which the State will compensate companies, investors and savers with assets in dollars or euros, for possible losses suffered by fluctuations in the lira.

In a televised appearance after a meeting of his cabinet of ministers in Ankara, the Turkish president announced that the government will introduce a series of financial measures to “alleviate” the concerns of those citizens who have been forced in recent months to buy foreign currency before the collapse of the lira, fearing that their savings will lose value.

As Erdoğan explained, the Turkish State will guarantee the value of the deposits in Turkish lira and its holders will be compensated for possible losses if the lira loses value, so that no citizen will need to change their accounts in lira to euros or dollars due to fear of suffering losses.

“For exporting companies that have difficulties with prices due to fluctuations in exchange rates, they will receive a future exchange rate through the Central Bank,” the Turkish president also announced, adding that deductions on dividend payments from companies will be reduced to 10%, and that the percentage of state subsidy in the pension system will increase from the current 5% to 30%.

“Turkey is committed to the free market economy”

The Turkish president once again insisted on the policy of keeping interest rates low in Turkey to stimulate economy growth and employment, assuring that with low interest rates “we will see inflation reducing in a couple of months.” Despite the fact that this statement contradicts the standards accepted by most economists, Erdoğan stressed that Turkey is fully committed to a free market economy.

“Turkey neither has the intention nor does it need to leave the free market economy and the exchange rate regime“, underlines the Turkish president during the announcement of measures that, in a matter of hours, have led thousands of Turks to change their deposits in dollars or euros to Turkish liras, causing the Turkish national currency to trade this morning at an exchange rate of less than 14 liras per euro, while it was exchanged at a rate of just over 13 lira for every US dollar. However, yesterday, the Turkish lira had broken the barrier of 20 liras for every euro in its exchange rate.