ANKARA

Recent steps by the Turkish Central Bank and Turkey's new economic model will lead to lower inflation, said the nation’s president on Friday.

Since the nation’s new economic plan was announced, bank deposits in Turkey using the local lira currency grew 23.8 billion Turkish liras ($2.2 billion) as of 15.00 Turkish local time (1200 GMT) on Friday, and the amount continues to grow, Recep Tayyip Erdogan told local broadcaster ATV.

These developments showed that all of Turkey’s citizens should trust in the lira, he added, speaking about a new measure announced Monday in which Turkey will compensate lira depositors for foreign currency fluctuations, while encouraging citizens to move to Turkish lira-based assets.

About the new FX-protected Turkish lira deposits, Erdogan said Turkish citizens have two guarantees, one from the Turkish Central Bank and the other from the Treasury.

Erdogan stressed that the new instrument was developed to ensure financial stability, and emphasized that it is not against the Constitution.

"Foreign exchange rates will stabilize in a very short period of time," he said, pointing to an end to recent fluctuations in the lira’s value.

Erdogan argued that the opposition party and its allies want to index the Turkish lira to the US dollar and the euro.

Since Erdogan announced new financial alternatives for Turkish lira savings accounts late Monday night, the Turkish lira recovered strongly.

The dollar’s value against the Turkish lira plummeted from 18.36 on Monday to as low as 10.23 on Thursday – a 44.3% decline, according to official data. It stood at 10.72 at 21.25 Turkish local time Friday (1825GMT).

Irrational price perceptions ended

Erdogan stressed that the Turkish lira’s strength comes from Turkey's economic infrastructure, production capacity, and its strong financial sector.

He underlined that the recent steps by the Central Bank and the new economic model have ended the irrational price perceptions and movements that aimed to disrupt the trust of depositors.

Legal action will be taken against those who make speculative remarks on exchange rates, and the Banking Regulation and Supervision Agency (BDDK) has taken the necessary steps on that, he added.

"Our aim is to reduce the fluctuations in foreign exchange rates for investors, industrialists, and depositors, foster the value of the Turkish lira, and boost its reputation," he explained.

"The economic program will boost market confidence. It will provide stability in exchange rates, which is very important. We expect this to have a positive impact on the budget in the long-term, instead of being a burden," he added.

'We will never allow unjust price increases'

Due to the appreciation in the Turkish lira and depreciation in foreign exchange rates, Erdogan said high prices in Turkish domestic markets should be properly revised downwards.

"We will never allow unjust price increases, we will give no chance to profiteers. We are strictly firm on this," he said.

The president called for producers, suppliers, and retailers not to condescend to extremely high prices or to hoarders.

About a bill that aims to penalize hoarders, Erdogan said the bill, when signed into a law, will give severe punishment to those who unjustly hoard goods.

The president also noted that the government also intends to bring the unemployment rate down to single digits.