Erdogan Speaks More Than Ever in Year That Shook Turkish Lira

(Bloomberg) -- Traders studying Turkish President Recep Tayyip Erdogan’s speeches for clues on policy can expect to spend even more days glued to headlines in 2022, though likely in shorter bursts.

Erdogan’s speeches, which often move the lira with comments on interest rates and geopolitics, are increasing in frequency while decreasing in duration, according to Bloomberg analysis of the 1,056 transcripts on his official website dating back to August 2014.

He’s delivered a record 217 speeches this year up to Dec. 19, many detailing his unorthodox plan to turn Turkey into an export-driven economy with low borrowing costs and a competitive currency. In that time, the lira has lost over half its value, sliding to successive record lows as the central bank slashed interest rates despite surging inflation.

Erdogan’s references to the lira overtook the dollar as the most frequently mentioned currency in 2020, and hit new highs this year. His mentions of interest rates also climbed this quarter. While Erdogan reiterates his belief that higher rates fuel inflation and must be avoided, global central banks are starting to tighten policy to cool prices.

“Erdogan’s speeches are usually rather complex and full of messages to his voter base, local businesses, foreign investors and other stakeholders,” said Emre Akcakmak, managing director of Greenwest Consultancy in Dubai. “The market reaction is much more significant this time as the central bank has indeed been aggressively cutting its policy rate at a time when almost nobody expected it to do so.”

Dominating Discourse

The increasing rhetoric underlines Erdogan’s dominance over public discourse in the country, where multiple TV channels broadcast his speeches live, sometimes as much as three times a day.

It means more opportunities to communicate with voters, but also to be heard by investors, who increasingly focus on his messaging above institutions such as the central bank. That follows his removal of policy makers opposed to rate cuts earlier this year, including the previous governor who had hiked rates.

Another group the president spends an increasing amount of time talking about is the opposition, who’ve stepped up criticism of economic policy to woo voters disillusioned by the rising cost of living.

Mentions of opposition parties and their leaders -- in particular the Republican People’s Party or CHP and its chief Kemal Kilicdaroglu -- spiked this quarter after almost two years of dormancy. The CHP has gained in polls since winning the mayoralties of Ankara and Istanbul.

Elections aren’t scheduled until 2023, but the data suggest the president wants to shore up support among his base in the meantime. 

His speeches are also increasingly focused on the new economic model. Its central tenets have been steadily rising in prominence in transcripts since 2018, when references to “investment”, “production”, “employment” and “growth” began to rebound. These mentions have set records this year.

“Given Erdogan’s specific style, we can understand why day-traders, algos or other type of market participants with shorter term horizons might be following his every single word to position accordingly,” said Akcakmak.

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