ANKARA, Turkey (AP) — Turkish President Recep Tayyip Erdogan urged foreign investors Wednesdays to have confidence in Turkey’s economy days after he fired his third central bank governor in less than two years, causing market upheaval.
Erdogan last week dismissed central bank head Naci Agbal, who had raised investor confidence and shored up the Turkish currency following a series of interest hikes, He replaced him with Sahap Kavcioglu, a banking professor who has argued for lower rates, in line with Erdogan’s economic thinking.
The move raised fears about Turkey's possible return to unconventional monetary policy and caused the Turkish lira to plummet. Erdogan has long argued that high interest rates cause inflation, although higher rates typically shore up a currency and help combat inflation.
“I call on foreign investors who invest in our country to trust Turkey’s power and potential,” Erdogan said during a speech he delivered at his party’s congress.
“The fluctuations of the past few days most definitely do not reflect the fundamentals of Turkey’s economy, real dynamics, potential or its tomorrow,” he said.
The Turkish leader also called on citizens to put any foreign currency or gold they kept at home into banks to help the economy.
Erdogan has been reaching out to nations in a bid to patch troubled relations and to attract foreign investments. He continued the conciliatory rhetoric during Wednesday's congress of his ruling Justice and Development Party.
“We will continue to shape our relationships with every country from the United States to Russia, from the European Union to the Arab geography in line with Turkey’s interests and our people’s expectations,” Erdogan said. “As a country located in the heart of Africa, Asia and Europe, we do not have the luxury to turn our backs on neither the east nor the west.”
Despite currency difficulties since mid-2018, Turkey was one of the few countries to post economic growth during 2020, thanks to government stimulus, tax breaks and cheap credit from state-owned banks.