The statement that he was protecting the Turkish economy from "attacks by foreign financial instruments that could disrupt the financial system" was made by Recep Tayyip Erdoğan when speaking to the country's Parliament yesterday.
This of course did not impress economists, New Money reported.
"he swelling inflation is not in line with the realities of our country," he said, according to Reuters.
He promised that the measures recently announced by his government to support the Turkish lira would soon drop the unfair price increases.
Erdoğan has vowed to cut inflation, which hit a record 36% in December, as the Turkish Central Bank prepares for another meeting next week on interest rates.
However, the comments made by economists were rather derogatory.
According to CNBC, Bluebay Asset Management analyst Timothy Ash called Erdoğan's statements "More complete and utter rubbish," stressing that there is no conspiracy from abroad.
"“Foreign institutional investors don’t want to invest in Turkey because of the absolutely crazy monetary policy settings imposed by Erdogan,” he wrote. “There is NO foreign plot.”
"Even the Turkish pound does not believe in Erdogan"
Meanwhile, John Hopkins University economist, Professor Steve Hanke, wrote on Twitter: "If [Recep Tayyip Erdoğan] wants to save the Turkish lira, and maybe his own skin, he should adopt a USD-based currency board. That would make the lira as good as the USD."
He also said that Turkey was "spontaneously dollarizing", while publishing an article in the Israeli newspaper Haaretz, entitled "Even the Turkish lira stopped believing President Erdogan".
Turkey is spontaneously dollarizing. Turkish stores are starting to display their prices in USD. If RTE wants to save the lira, & maybe his own skin, he should adopt a USD-based currency board. That would make the lira as good as the USD. It's Turks wanthttps://t.co/w9ndax9l8W
— Steve Hanke (@steve_hanke) January 12, 2022
In fact, in another post, he describes Erdoğan's economic policy as absurd and points out that using special measurements, he estimates that inflation in Turkey today at "97.17%, almost three times higher the BODUS December 2021 official rate from [Recep Tayyip Erdoğan]."
Pres. Erdogan's irrational economic policies have FUELED Turkey's #inflation. Using high-frequency data & PPP principles, I measure Turkey’s #inflation at 97.17%/yr today, almost 3x the BOGUS Dec2021 official inflation rate reported by TurkStat. More daily dishonesty from RTE. pic.twitter.com/wghvzXt88y
— Steve Hanke (@steve_hanke) January 12, 2022
A few days ago, Erdoğan announced that in an effort to strengthen the Turkish lira, exporters would have to convert 25% of their revenue into local currency if payments are made in US dollars, euros or pound sterling.
According to CNBC, Erdoğan's critics consider this plan unsustainable and that in fact it is a hidden increase in interest rates.
At the same time, the reserves of the Central Bank of Turkey are declining, with gross reserves falling in the first week of 2022 by $1.6 billion to $109.4 billion, as according to Goldman Sachs, the foreign exchange reserves were reduced at $71 billion.
READ MORE: Turmoil in Turkey: Erdogan targets people’s jewellery to deal with financial crisis.
