Turkey's Erdogan declares new economic growth strategy, lira surges

FILE PHOTO: Turkish President Tayyip Erdogan speaks during a ceremony to mark the modern Turkey's founder Ataturk's death anniversary, in Ankara, Turkey November 10, 2020. Presidential Press Office/Handout via REUTERS

ANKARA (Reuters) - Turkish President Tayyip Erdogan, in an apparent rhetorical shift on economic policy, said on Wednesday the government was forming a new growth strategy financed by international investment and he stressed the need to raise reserves.

In comments which accelerated a lira rally, Erdogan said economic policies would be built on price, monetary and financial stability, adding he would meet international investors to tell them about opportunities in Turkey’s economy.

“We are building a growth structure which creates qualified employment, which does not cause inflation and a current account deficit,” he told lawmakers from his AK Party in parliament. He repeated his frequent assertion that interest rates “are the cause of inflation” and said Turkey would reduce inflation.

Speaking days after replacing his finance minister and sacking the central bank governor, Erdogan said the bank had a duty to determine policies for price stability and he believed the new governor will use tools transparently in line with the economy’s main goals.

Erdogan said the positive mood in markets showed Ankara was on the right path, adding he was determined to lower inflation to single digits.

The lira TRYTOM=D3 surged 3% to 7.9 against the dollar, hitting its strongest level since Oct. 22 and rebounding from a record low of 8.58 last week.

Reporting by Ece Toksabay Tuvan Gumrukcu; Writing by Jonathan Spicer; Editing by Daren Butler and Dominic Evans