Erdoğan announces moves to encourage savings, Turkish lira makes gains
Turkish President Recep Tayyip Erdoğan on Dec. 20 announced a series of measures to encourage lira-denominated savings, easing the pressure on the Turkish currency.
In a televised speech following a Cabinet meeting, Erdoğan said the government would offer a new financial vehicle that would “alleviate" the concerns of citizens who have been buying foreign currency, fearing that returns on their lira savings are being eroded. Turkish lira deposit holders would be compensated for possible losses from the decline of the local currency, he said, but did not provide details.
“From now on, our citizens won’t need to switch their deposits from Turkish lira to foreign currency, fearing that the exchange rate will be higher," Erdoğan said.
Erdoğan also said the Turkish government will introduce a measure to help exporters while also increasing the government’s contribution for private retirement plans.
Turkey’s lira strengthened Tuesday, after a wild start to the week.
Turkish leader stunned markets and his political opponents Monday by effectively tying the value of some lira bank deposits to the dollar.
Erdoğan has long argued that high interest rates cause inflation. He has vowed to keep rates low and prioritize growth, exports and employment.
“With the drop of the interest rates, we will experience together in a few months how the inflation rate will begin to fall," Erdoğan said.