Will Erdoğan's move stop the lira's decline?
President Erdoğan has announced new measures to stop the freefall of the lira. In a bid to stop citizens from exchanging their money for foreign currency, he said that if lira losses against foreign currencies exceed banks' interest rates, the government will cover those losses for lira deposit holders. After the announcement the lira recovered the losses of the past three weeks overnight. Erdoğan still plans to stick to his controversial low interest rate policy, however.
The currency is more attractive again
The government has the crisis under control, writes the pro-government daily Star:
“Turkey has performed excellently during the pandemic in terms of healthcare and economic subsidies. All our citizens were given access to vaccination and health services and short-time allowances were paid to entrepreneurs, traders, small businesses and workers, as well as assistance in the form of cash payments, unemployment benefits and social benefits. ... President Erdoğan gave a speech last night that restored confidence in the lira. ... This new regulation will both prevent those citizens who have placed their trust in the Turkish lira from being put at a disadvantage and make the lira more attractive again.”
Just a reprieve before the big crash
Echo of Moscow republishes a post from the Telegram channel SerpomPo which says Erdoğan's bailout plan is unsustainable:
“The measures are original and - most interestingly - they don't require valuta intervention or immediate investment at all. ... But there is no perpetual motion machine. Fighting the currency crisis with lira can't work in the long term. ... Independent observers say it looks like the country's economic problems will grow like an avalanche for the time being. The population is groaning under the weight of the rising prices. In the medium term, the lira is not sustainable. The spectre of Turkey's national bankruptcy is becoming more and more real, as are the signs of a new political crisis.”
Making things easy for the opposition
There seems to be no logic anymore behind Erdoğan's policies, says the Handelsblatt's Istanbul correspondent Ozan Demircan:
“All investors and analysts see is chaos. He is making it easy for the opposition in the country. All they have to do is promise to end this chaos and return to orthodox policies. This promise alone is catching on with the citizens, as the polls now show. ... It was Erdoğan himself who brought prosperity to poor Turks - and to himself from election victory to election victory. The next elections will be held in 18 months' time at the latest. Erdoğan wants to win again. His star, however, has already begun to sink.”