The Turkish lira is declining 7%, with the intensification of sales to buy the dollar

The Turkish lira continues its “missile slide”… and Shimshak calls for “patience”

The Turkish lira continued its rocket slide, while Treasury and Finance Minister Mehmet Simsek called for patience, stressing that his urgent priority now is to strengthen his economic team and commit to rules-based policies that increase predictability.

The lira lost about 0.9 percent of its value during (Thursday) trading, retreating to a new record level, as it traded at 23.37 pounds to the dollar. Amid suggestions from experts that the new government will ease control over the exchange market and leave the currency for free circulation.

Experts believed that the government is facing a challenge due to the payments of lira deposits that are protected by exchange rate fluctuations, which is the biggest threat at a time when the central bank’s reserves have taken an upward trend.

In all, the Turkish lira has lost about 20 percent of its value since the beginning of this year, after losing 30 percent last year and 40 percent in 2021, and the declines intensified after President Recep Tayyip Erdogan won a third presidential term on May 28. According to forecasts by Goldman Sachs, the lira will decline to a record low, and the dollar exchange rate will reach 28 lira within 12 months.

The net foreign exchange reserves of the Turkish Central Bank fell to a record low of $4.4 billion last May, due to interventions to maintain the stability of the lira over 5 years.

Since the country’s transition to a presidential system in 2018, Turkish President Recep Tayyip Erdogan has insisted on applying an economic model that contradicts the well-established traditional rules of the economy, considering that high inflation is a result of high interest, which caused severe crises for the economy, as inflation rose to more than 85 percent before. That it gradually decline during the election period and the rise in the current account deficit and the trade deficit.

With Mehmet Simsek assuming the Ministry of Treasury and Finance in the new formation of the government, he announced that Turkey had no choice but to return to a rationale in economic policies to ensure predictability.

He added, “Transparency, consistency, predictability, and compliance with international norms will be our basic principles in achieving this goal, and we will work to reduce inflation to single digits and achieve prosperity for the Turkish people.”

After taking the oath of office with the members of the new government in the Turkish parliament (Wednesday), Shishak urged the Turks to “patience,” stressing that “his urgent priority now is to strengthen his economic team and commit to developing rules-based policies” that increase predictability.

Turkish women watch goods in the commercial area in the center of the Turkish city of Istanbul, in light of the significant deterioration of the price of the lira against the dollar (AP)

Simsek said, in two tweets on Twitter: “We reaffirm our commitment to developing rules-based policies to increase predictability as we confront domestic and global challenges.”

He added, “Although there are no shortcuts or quick solutions, you can rest assured that our experience, knowledge and dedication will help us overcome potential obstacles in the future… Our urgent priority is to strengthen our team and establish a reliable economic program, but we need some patience and time.”

He continued, “I have a special request from our dear compatriots… Please do not trust any news or rumors that you have not heard from me regarding our practices and policies.”

Reports revealed that the reason for the delay in announcing Şimşek his economic team, especially the announcement of the assumption of the Turkish expert in traditional monetary policies, Hafiza Gay Arkan, as head of the Turkish Central Bank, to succeed its current president, Shihab Kauji Oglu, is due to the unwillingness to blame the new team for the current decline of the lira. and problems in the economy.

Reports confirmed that priority is given to central bank employees, and changes are expected in other regulatory institutions and public banks.

2023-06-07 08:39:31

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