Last Monday, the Turkish lira witnessed a significant recovery of more than 33 percent after President Recep Tayyip Erdogan’s statements, reaching 12.2756 against the dollar.
Speaking at a press conference after chairing a government meeting at the Presidential Complex in Ankara, President Erdogan said that his country will launch a new financial instrument that will allow achieving the same level of potential profits for savings in foreign currencies by keeping assets in the lira.
In the same context, Turkish President Recep Tayyip Erdogan confirmed earlier this month that his country’s economy will continue its path according to the rules of a free market economy as it has been so far.
Erdogan made it clear that Turkey will raise its central bank’s foreign exchange reserves, not foreigners.
He added, “When other countries take such a step (lowering interest), they are met with applause, but when Turkey takes such a step, it is under violent attack.”
Moreover, the new economic model announced by Erdogan, represented in lowering the interest rate to reach economic independence, enjoys great support from Turkish citizens, as many have deposited their money in Turkish lira.
In this regard, economic experts Lenny Shafak emphasized that the decisive turning point in achieving the goal of the new economic model will be next summer
Experts said, “By realizing the new model and improving conditions over time, the cost of financing at low interest will be reduced, investor confidence and predictability will increase, and this will lead to a strong rise in investment.”
The experts continued: “With this model, the industrial sector, tourism revenues, and revenues will contribute to increasing growth because there will be an increase in the general recovery in investment demand.
The upward trend in tourism receipts will continue, and the strength of exports and productivity-oriented policies will be enhanced.”
In a related context, the positive expectations of exports and tourism will affect the increase in production in the upwardly connected service sectors, and even the industry, services, and agricultural sectors will be a contributor to growth, according to experts.
Experts explained that if these monetary and fiscal policies are implemented, there will be an increase in competition and productivity in the markets for goods and services, and inflation will drop to good levels.
Also, reducing inflation will increase the efficiency of the financial intermediation system and fixed capital investments in the real sector.
Long-term sources of financing for the Turkish lira will also be developed, and this will enhance economic and financial stability.
For the success of the new economic model, macroeconomic stability will be maintained, so the Turkish economy must be in accordance with the rules of a free market economy in conjunction with taking precautionary measures to reduce volatility in the markets.