ANKARA

- After the Turkish lira plunged sharply to record lows against the dollar last week, Turkish President Recep Tayyip Erdogan ordered an investigation into possible currency manipulation. What are the implications of this move for Turkey and its national currency?

Anadolu Agency reported that Erdogan had tasked the Government Oversight Board, an auditing body that reports to the presidency, to identify the institutions that bought large amounts of foreign currency and determine whether any manipulation had occurred.

The Turkish lira plunged to record lows last week, after Erdogan pledged to stick to his policy of cutting interest rates.

While the Turkish currency lost about 45% of its value this year, and recorded about half of those losses in the past two weeks.

In the same context, the Turkish President noted, on Friday, November 26, that his government's goal is to stand with the future of Turkish citizens, their work and their livelihood, saying that "the value of the benefits will decrease, we will not let the benefits crush our people and our farmers."

Erdogan also pointed out, in a speech he delivered at the opening ceremony of 96 projects in the state of Izmir (west of the country), that his country had taken "steps that blocked the way in front of the schemes that were being set up for developing countries, by increasing inflation by raising interest rates."

On Monday, Erdogan said he would never support raising interest rates, and "never back down from it."


fill the gaps

In this context, the researcher specializing in the Turkish economy, Dr. Ahmed Musabih, stated that Erdogan’s step in the investigation is an attempt to fill in the gaps in the ease of selling the lira, which can prevent such attacks in the future.

Mosbeh told Al-Jazeera Net, "With this investigation, it is possible to accurately determine the source and objectives of these sales operations of the lira, especially as they are carried out simultaneously and within a systematic campaign, and then frankly with the people on this issue, especially in light of the ignition of the pace of the economic war against Turkey."

The economic researcher expects the investigation to reflect positively on the lira, but to a limited extent through the preventive measures that can be taken in this context, according to the results of the investigation.

The lira fell to 13.45 against the dollar, equivalent to 15%, in historic selling on Tuesday, November 23, before recovering somewhat later.

In turn, Professor of Economics and Finance at the University of "Artuklu" Metin Erol told Al Jazeera Net that speculation and the withdrawal of the lira into the politics arena, before the electoral elections, is the direct reason for Erdogan's decision to open an investigation, especially after the exchange rate declined and the market fears were dealt with after the rate cut. Interest and expectations are constantly discounted.

 interest lobby

Erol suggested that speculation is not limited to what he described as local tools, but there is speculation and withdrawals of foreign funds as well, with the aim of preventing Turkey from independence with its economic decision and keeping it subject to the high interest lobby and the major countries.

He added, "Speculators will incur losses if the investigation proves their relationship to the deterioration of the lira, and that the lira will recover and stabilize after the market absorbs the shocks of the interest rate cut, and the economic results and high indicators will appear, especially in the production and export sectors."

While the economic expert Abdel Hafez Al-Sawy stated to Al-Jazeera Net that the step of investigating possible manipulation came due to violent speculation on the exchange rate, there were Turkish and foreign beneficiaries of the speculative process.

El-Sawy believes that there is a group that has used political speculation to embarrass Erdogan and the ruling Justice and Development Party in order to show them failures in managing the economic file. in the money exchange.


He pointed out that the investigation-based supervisory board would accomplish its mission in a short period of time, leading to a good improvement in the lira, but if the investigation did not result in the presence of manipulators, the investigation’s step would not have an impact on the currency, which needs a package of measures and not a single measure.

The war of economic independence

On Monday, November 22, 2021, Erdogan confirmed that his country will emerge victorious from the war of "economic independence" it is waging at the current stage, explaining that he will not allow excessive price increases.

Erdogan stressed, in a speech he delivered after a meeting of the Turkish government at the Presidential Complex in the capital, Ankara, "We will not allow the opportunists who raise the prices of goods excessively under the pretext of the high exchange rate, and we will continue the struggle against them," noting that there are maneuvers being hatched regarding the exchange rate and interest rates.

For his part, the head of the "Justice and Development" Party's branch in Istanbul, Osman Nuri Kabaktepe, attributed the decline in the exchange rate of the lira, despite there being indications of the Turkish economy's growth at a large rate, the decline in the unemployment rate and the increase in exports, to the speculations of global financial circles against Turkey and the repercussions of the Corona pandemic on Turkey. the whole world.

It should be noted that the European Commission raised its forecast for the growth of the Turkish economy in 2021 from 5.2% to 9%.

This came in a report published by the Commission, a week ago, on European economic growth forecasts for the fall of 2021.

Official data issued by the Turkish Statistics Authority also revealed that the unemployment rate decreased by 0.4 points in the third quarter of this year, compared to the second quarter of the same year.

Recent data showed that the Turkish economy achieved a growth of 7.4% in the third quarter of this year, compared to the same period in 2020.

Banking sector faces market volatility

For his part, the Governor of the Central Bank of Turkey, Şehab Kocaoglu, stressed that the banking sector is able to overcome market volatility, and announced that he discussed recent interest rate cuts with representatives of banks in a meeting after the Turkish lira fell to record levels.

After a meeting with senior bankers and representatives of the Banking Regulatory and Supervisory Authority, the governor said that participants made general assessments of economic developments, and noted that the banking sector is "very strong".

The Turkish Banks Association said, in a statement, that the meeting discussed global and local developments, markets and developments in the banking sector, describing the meeting as "very useful."

Representatives of the Banking Regulatory and Supervision Authority stated at the meeting that the authority will consider taking measures, such as determining the capital adequacy ratio in the country according to sectoral needs, and staying in line with international standards.

The Turkish Central Bank data showed the ability of Turkish commercial banks to withstand the shocks, revealing that the country's commercial banks are in good health and have sufficient liquidity to withstand the lira crisis.

According to analysts, this factor eased pressure on Erdogan.