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Erdogan rejects possibility of early elections in Turkey because of lira rate collapse

ANKARA, December 22. /TASS/. Turkey’s President Tayyip Erdogan strongly rejected the possibility of holding early presidential and parliamentary elections in the country amid a record fall in the Turkish lira exchange rate.

“I declare that the elections will be held in June 2023. There will be no early elections. I am putting an end to [this issue],” the Turkish leader said speaking at a meeting of the parliamentary faction of the ruling Justice and Development Party.

According to Erdogan, the republic’s authorities “know what they are doing and where they are going.”

“We have stated that we will not put pressure on our people either with interest rates or inflation and we are fighting for this. We are on the verge of a breakthrough and we will achieve the results we want,” the Turkish President said.

Turkish lira deposits

On Tuesday, Turkish authorities unveiled a unique tool for the country’s financial practices to protect private deposits in Turkish liras, which is designed to significantly boost interest in deposits in the national currency amid its excessive volatility this year.

Individuals will be able to open time-deposit accounts in lira while the state guarantees that by the time they close their accounts they will not lose their funds over losses due to changes in the exchange rates or the interest rate, which were set upon opening.

Individuals can open such deposits for 3, 6, 9 and 12 months. The country’s Finance Ministry explained that on the day of closing the account, the bank will compare the interest rate and the exchange rate on the date of opening. If any of these indicators reduces the originally planned profitability of the deposit, the bank pays back the total amount to the client, recalculates it in the client’s favor and upward in compliance with the current situation on the financial market.

During November alone, the Turkish lira went into a steep dive, falling by almost a third compared to the beginning of the year. It is believed that such a fall was caused by the policy of the Central Bank, which continues to reduce the lending rate, under pressure from the authorities. Last week the regulator lowered one of the key rates at weekly repo auctions from 15% to 14%.

On Monday, the Turkish lira fell to 18 lira per dollar. However, after the authorities announced new measures to restore financial stability, the national currency won back up to 30% of the value lost in recent weeks in just a few hours. Currently, the lira exchange rate is around 13 lira per dollar.

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