Recent Turkish Central Bank steps will lead to lower inflation: President

By Ovunc Kutlu

ANKARA (AA) – Recent steps by the Turkish Central Bank and Turkey's new economic model will lead to lower inflation, said the nation’s president on Friday.

Since the nation’s new economic plan was announced, bank deposits in Turkey using the local lira currency grew 23.8 billion Turkish liras ($2.2 billion) as of 15.00 Turkish local time (1200 GMT) on Friday, and the amount continues to grow, Recep Tayyip Erdogan told local broadcaster ATV.

These developments showed that all of Turkey’s citizens should trust in the lira, he added, speaking about a new measure announced Monday in which Turkey will compensate lira depositors for foreign currency fluctuations, while encouraging citizens to move to Turkish lira-based assets.

About the new FX-protected Turkish lira deposits, Erdogan said Turkish citizens have two guarantees, one from the Turkish Central Bank and the other from the Treasury.

Erdogan stressed that the new instrument was developed to ensure financial stability, and emphasized that it is not against the Constitution.

"Foreign exchange rates will stabilize in a very short period of time," he said, pointing to an end to recent fluctuations in the lira’s value.

Erdogan argued that the opposition party and its allies want to index the Turkish lira to the US dollar and the euro.

Since Erdogan announced new financial alternatives for Turkish lira savings accounts late Monday night, the Turkish lira recovered strongly.

The dollar’s value against the Turkish lira plummeted from 18.36 on Monday to as low as 10.23 on Thursday – a 44.3% decline, according to official data. It stood at 10.72 at 21.25 Turkish local time Friday (1825GMT).