Turkish lira slips again

Turkey’s lira slid to beyond 16.55 against the dollar on Monday, bringing its losses to more than 20 per cent this year, due to concerns about a surge in inflation to a 24-year high and the finance minister’s promise that rate would remain steady.

The Turkish Lira weakened to as low as 16.57 to the US dollars on Monday morning.

Recent losses have brought it back towards the record lows hit on December, 20, 2021 which is blamed on interest rates cuts in late 2021.

The lira shed 44 per cent last year and has been the worst performer in emerging markets for several years running.

Milliyet newspaper on Monday cited Finance Minister Nureddin Nebati as telling deputies from Erdogan’s ruling AK Party at a weekend meeting that a near-term rate hike or cut was not being considered.

He forecast that annual inflation would be around 48-49 per cent at year end, falling to 19.9 per cent by end-2023. Earlier this year he had promised single-digit inflation by an election set for June of next year.

The lira slide, war in Ukraine and surging energy prices pushed Turkish annual consumer price inflation to 73.5 per cent in May, the highest level since 1998. Inflation began to jump last autumn after a 500 basis-point rate easing cycle.

Reuters