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Lira gaining value would slow industry, raise unemployment: Turkey’s finance minister

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Turkey’s Treasury and Finance Minister Nureddin Nebati has said that if the Turkish lira gains in value against the US dollar, it would slow industry in Turkey in addition to increasing the unemployment rate, Turkish media outlets reported.

“If the Turkish lira gains in value, industry will slow down and there will be [an increase in] unemployment,” Nebati said during a TV program on Monday, explaining that the more valuable the lira against the US dollar, the more Turkey will turn to imports and domestic production will drop.

The lira, which lost more than half its value against the dollar in 2021 alone and tumbled 29 percent in 2022, traded at 18.81 to the US dollar on Monday. It has been the worst performer in emerging markets for several years running due largely to economic and monetary policy concerns under President Recep Tayyip Erdoğan’s government.

The Turkish economy has been in a tailspin since 2021 when Erdoğan — who is up for re-election in May — put pressure on the central bank to start slashing interest rates.

Contrary to economic orthodoxy, the president is convinced that high interest rates fuel inflation rather than rein it in.

When asked whether there would be any change in the ruling Justice and Development Party (AKP)’s monetary policy if they win the elections in May and continue governing the country, Nebati said the current policies would remain in place as long as Erdoğan remains in power.

“There would be no interest rate hikes, and no concessions would be made in budget discipline,” the minister said.

Over the past several years Turkey has been suffering from a deteriorating economy, with high inflation and unemployment as well as a poor human rights record. Erdoğan is criticized for mishandling the economy, emptying the state’s coffers and establishing one-man rule in the country where dissent is suppressed and opponents are jailed on politically motivated charges.

A staggeringly high cost of living has become the new normal in Turkey, where frequent increases in food and utility prices are pushing up inflation, further crippling the purchasing power of citizens.

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