Recep Tayyip Erdogan criticizes central bank, exporters must trade

09/14/2018

Erdogan complains about central bank
German exporters have to convert their proceeds into lira

 

  

AFP

Recep Tayyip Erdogan: The Turkish president criticizes the central bank, but the markets are relieved

  After the Turkish central bank raised interest rates by 6.25 percentage points to 24 percent on Thursday, investors now access the Turkish lira. The currency continued to rise on Friday, while the dollar fell by one percent to 6.0015 lira.

  President Recep Tayyip Erdogan had publicly demanded lower interest rates a few hours before the hike – and rallied on Friday. Before party supporters, he criticized on Friday morning, the monetary policy of the Central Bank. His patience with the monetary policy of the monetary guardians have limits. The interest rates are now quite high. "We will see the results of independence," said Erdogan, referring to the formal independence of the Turkish central bank from the political leadership. Erdogan is an avowed opponent of high interest rates, although economists consider it inevitable should the lira crisis ever be overcome.

  

The lira has already lost 40 percent this year and despite the rate hike, analysts warn of a new weakness in the lira. "The rate hike was the right move, but what's important now is how the Turkish president is positioning itself to streamline monetary policy," said economist Kota Hirayama of brokerage firm SMBC Nikko Securities at the DPA.

  

Should the government intervene in the decisions of the monetary guardians, the current increase in interest rate is a missed lovemaking. Also Commerzbank foreign exchange analyst Tatha Ghose sees no tendency for a lasting lira appreciation. It is expected that inflation will soon exceed the current interest rate.

  
DIHK boss Schweitzer: "No lure for investors"

  Meanwhile, the German economy is calling on Turkey to ease trade barriers in light of the decline in lira. "Export earnings must now be compulsorily converted into at least 80 percent Turkish lira, which is not a lure for foreign investors," said the President of the German Chamber of Commerce and Industry (DIHK), Eric Schweitzer, the German Press Agency.

  

Schweitzer demands that Turkey clearly commit to the rules of the customs union with the EU. With 6500 German companies on the ground, Turkey is an economically significant partner for Germany. However, many companies are uncertain because of the economic and political situation. Especially the lira decay verhagele many companies the business. "In the last four months our exports to Turkey are already declining."

  Schweitzer calls for signals of stability from Turkey, especially with regard to legal certainty or independence of the central bank. "The companies are waiting for strong signs of the Turkish government to restore lost trust gone." Today, a German-Turkish economic dialogue of the DIHK takes place in Berlin in order to promote the exchange after difficult months. Due to its young population and its proximity to numerous other sales markets, Turkey continues to be a promising market, emphasizes Schweizer.

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