The Turkish lira slips again; Nebati says rates will remain unchanged

A money changer holds Turkish lira banknotes at a currency exchange office in Ankara, Turkey, October 12, 2021. REUTERS/Cagla Gurdogan

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ISTANBUL, June 6 (Reuters) – The Turkish lira slipped above 16.55 against the dollar on Monday, taking losses to more than 20% this year, on fears of inflation surging to a 24-year high and the promise of the Minister of Finance that rate would remain stable.

The lira weakened to 16.57 against the US currency at 07:06 GMT. Recent losses have dragged it back to record lows reached on December 20 in a currency crisis triggered by a series of unorthodox interest rate cuts at the end of 2021.

The lira lost 44% last year and has been the worst performer among emerging markets for several years in a row, largely due to economic and monetary policy concerns under President Tayyip Erdogan’s government.

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The Milliyet newspaper quoted Finance Minister Nureddin Nebati on Monday as telling lawmakers from Erdogan’s ruling AK party at a weekend meeting that a rise or fall in short-term rates was not considered.

He projected annual inflation to be around 48-49% at the end of the year, falling to 19.9% ​​by the end of 2023. Earlier this year he promised single-digit inflation in elections scheduled for June next year.

A forex-protected lira deposit scheme, launched after the lira hit its all-time high in December, would continue and its cost to the budget as of Friday was 21.1 billion lira (1, $29 billion), he also said.

The falling lira, war in Ukraine and soaring energy prices pushed Turkey’s annual consumer price inflation to 73.5% in May, the highest level since 1998. Inflation began to surge last fall after a 500 basis point rate easing cycle. Read more

($1 = 16.3650 lira)

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Reporting by Daren Butler; Editing by Jonathan Spicer

Our standards: The Thomson Reuters Trust Principles.

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