© Reuters Investing lira, moving towards 1000 lira / gram levels.
Not long ago, the Turkish finance minister confirmed that his country would move forward with the economic model announced by President Erdogan last year, which would combat higher prices and encourage the country to increase other revenues such as exports and tourism.
Last year, the Turkish central bank cut interest rates four times by 500 basis points from September 2021 to December, while inflation in the country hit its highest level in nearly a quarter of a century.
Although most central banks sought to raise interest rates in the face of inflation, the policy of the Turkish central bank remained unchanged for 5 consecutive sessions.
Vision of the Minister of Finance
Finance Minister Noordeen Nabati said it was projected to be 48-49% by the end of this year.
The Turkish finance minister said on Monday that inflation would be 48-49% by the end of 2022 and 19.9% by the end of 2023.
The minister also said that in the future Turkish authorities do not want to review the policy adopted since the end of last year on the issue of the central bank’s discount rate.
“There are no minimum plans to reduce or raise the rate,” the Turkish finance minister said.
Inflation now
Turkey’s inflation rose to 73.5 percent year-on-year from 69.97 percent in May, the National Statistics Office said on June 3.
At the same time, according to the Independent Inflation Analysis Group, it reached 160.76% in May, and a month ago, the group’s experts recorded an inflation rate of 156.86% in Turkey.
Interest rates
For the fifth month in a row, the country’s central bank has kept the discount rate at its weekly repurchase auction unchanged at 14%.
At the same time, many domestic economists are talking about the need to raise prices in the face of volatility in financial markets and high inflation.
According to the country’s central bank, inflation in Turkey will reach almost 58% by the end of this year, up from 46.4% previously.
A questionnaire
The regulator conducted a survey among financiers, based on which it released a survey on the expectations of market participants.
According to the survey, inflation in Turkey is expected to reach 57.92% by the end of this year, and economic growth – 3.3% instead of the originally planned 3.2%.
Participants expect the exchange rate of the national currency, the Turkish lira, to be 17.57 lira against the US dollar by the end of 2022, while the lira is expected to fall to 18.47 lira.
Will begin to fall
The Turkish lira began to fall sharply in May amid the release of inflation figures for April.
Analysts expect the Turkish currency to continue to depreciate due to rising inflation and the central bank’s reluctance to adjust the rebate rate to 14% since the end of last year.
According to market participants, by the end of 2022 it will reach $ 34.4 billion, compared to previous estimates of $ 27.5 billion, and Turkey’s budget deficit is expected to reach $ 22 billion next year.
The evolution of the lira
The Turkish lira fell 0.6% during these moments of trading on Monday, hitting close to $ 16.6 lira, down from 16.4 lira at the end of May.
Since the beginning of this year, the Turkish lira has depreciated by 3.3 lira, or 25%, against the dollar, making it one of the worst performing emerging currencies, down from the current level of 13.3 lira. Dollar.
Also in one month, especially since May 5, it fell to 2 pounds, down 13% from the current level of 14.7 pounds on May 5.
Since the end of last year, Turkey’s central bank has kept the weekly repo rate unchanged at 14%, and according to Turkish Finance Minister Nurdin Nabi, there are no plans to change that.
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