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Erdogan hopes the Turkish pound will stabilize soon

Turkish President Tayyip Erdogan said on Saturday he hoped exchange rates would stabilize soon and promised low interest rates again, following a historic dip in the pound to record lows, according to Reuters.

“God willing, we will stabilize the exchange rates in a short time,” Erdogan told an audience in the eastern city of Siirt. “Interest rates are a disease that makes the rich even richer and the poor even poorer,” he added.

The pound has fallen about 30 percent in the past month in a sell-off due to aggressive interest rate cuts sought by Erdogan. However, economists and opposition politicians say the cuts are reckless.

The currency hit a record low of $ 14 per dollar on Tuesday.

It is recalled that yesterday the international credit rating agency S&P Global warned that the attempt of the Central Bank to prevent the devaluation of the Turkish pound by selling dollars in the market puts Turkey in further danger.

The S&P said in a written statement to Reuters that the Central Bank’s use of the reserves to protect the Turkish lira exchange rate risks further undermining confidence in the Turkish currency and affecting the country’s rating. which is currently in grade B +.

The statement, which said that the majority of the Central Bank’s foreign exchange reserves are provided indirectly through foreign currency and gold reserves in banks or by borrowing through exchanges from Turkish commercial banks, stressed that “the use of these borrowed reserves for “Defending the exchange rate carries risks for the pound, as there is a risk that it could further undermine confidence and possibly raise issues of financial stability again.”

The statement warned that Turkish banks could need significant capital support if they run into more problems in the future.

And all this at a time when the Turkish pound lost more than 30% of its value last month, after the Central Bank cut interest rates for the third time despite rising inflation and with a Recep Tayyip Erdogan who continues to defend and defend promotes a policy of low interest rates.

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Source From: Capital

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