Lira Gains Over 30% as Erdogan Makes FX Policy Tweaks

LOCAL NEWS

• Lira firms over 30% as Erdogan announces measures to halt dollarization.
  • 1) Says government will make up for losses incurred by holders of lira deposits should the lira’s declines against hard currencies exceed interest rates promised by banks.
  • 2) Authorities will offer non-deliverable forwards to help exporters mitigate foreign-exchange risks emanating from the elevated levels of volatility.
  • 3) Withholding tax for investments in lira notes issued by the government will be reduced to 0% from 10% currently.
  • 4) Government will match 30% of all contributions made by private-sector workers to the optional pension system, up from the current level of 25%
• In remarks on Bloomberg last night Erdogan said he would not back down from his current economic policy, Turkey has an abundance of FX reserves and that inflation would fall.
  • Also said elections would not be held early and that Turkey would no longer be a haven for hot money Turkey
• Turkiye Raporu survey shows 57% of Turks disagree with Erdogan’s new economic model. Also, 11% of Erdogan’s AKP party and 19% of his coalition ally MHP said they disagree with the current direction .