ERBIL (Kurdistan 24) – Turkey’s central bank on Monday said it would adjust its monetary stance after President Recep Tayyip vowed to Ankara would pursue non-dollar transactions in trade with its allies amid tensions with Washington.
During a visit to Kyrgyzstan on Sunday, Erdogan accused the US of “behaving like wild wolves” and noted his country was in negotiations with Russia, who was hit with fresh sanctions in August, over non-dollar trade.
“Using the dollar only damages us. We will not give up; we will be victorious,” Erdogan said. The Turkish lira dramatically dropped in value last month as tensions with the US escalated.
Recent developments in the inflation outlook, Reuters quoted the Turkish central bank as saying the following day, showed “significant risks” to price stability and that the financial institution would take necessary actions to support price stability.
The Turkish lira rose briefly following the statement which fueled speculation the government may raise rates, before eventually sliding further down as investors worry about Erdogan’s influence over monetary policy.
Controversy surrounds Turkey’s worsening financial woes, as Erdogan and his Treasury and Finance Minister - also son-in-law - Berat Albayrak, lay the blame entirely on US President Donald Trump, despite the central bank refusing to raise its interest rates since the crisis began three months ago.
The Turkish President, who for the past 16 years led his NATO member country into becoming a hot destination for foreign investment, is now struggling to come up with a policy to save the debt-burdened nation from going bankrupt.
The Turkish economy, suffering from a lack of liquidity, government’s refusal of structural reforms, low-interest rates per Erdogan’s orders, the disempowerment of judicial control over state expenditure, high inflation numbers of up to 13.5 percent, and a rising unemployment around 10 percent, is struggling to withstand the trade war with America.
The US’ imposition of sanctions on two Turkish ministers for their role in the continued detention of Americans, including pastor Andrew Brunson, have added to the markets’ distrust of investing in Turkey or its currency. Turkey also recently came under doubled tariffs on steel and aluminum by the Trump administration.