Drop up to 4% for the Turkish pound

The Turkish pound fell as much as 4% against the dollar on Tuesday as Turkey prepares for further inflation, which hit a 19-year high in December on an annual basis.

The country’s finance minister, Nureddin Nebati, has said he expects a return to stability after the currency has fallen sharply in recent months.

The Turkish pound fell to 13.5 pounds against the dollar from 12.96 on Monday, as economists predict that consumer prices will continue to rise, after the announcement of data showing that annual inflation in Turkey rose to 36 , 1% last month.

The pound hit a record low of ,4 18.4 a dollar two weeks ago, before recovering from measures taken by President π Tayyip Erdo .an’s government to support the currency.

For 2021, the pound recorded a 44% loss, marking the worst performance among emerging market currencies and the worst year since Tayyip Erdogan came to power nearly two decades ago (initially as Prime Minister and later as President of Turkey). .

Its “new economic program”, which envisioned sharp cuts in interest rates and an emphasis on exports and credit, triggered the monetary crisis, Turkey’s second in four years.

“We expect a steady exchange rate trend to consolidate over time,” Nebati, who was appointed finance minister by Erdogan last month, told the state-run Anadolu agency on Tuesday.

The central bank has cut its key interest rate by 500 basis points since September to 14%, under pressure from Erdogan, who restructured the bank’s leadership last year.

Many economists describe the monetary easing as reckless, given that consumer prices jumped to 36.08% year-on-year in December, much higher than forecast, due to the weakness of the pound and transport and food prices.

Speaking after a cabinet meeting on Monday, Erdogan said he regretted the inflation figures and that his government was determined to reduce it to single digits, blaming rising global commodity prices for the weaker one. pound.

To limit the pound’s weakness, Erdogan unveiled a program two weeks ago under which the state protects local pound deposits from losses against hard currencies.

Deposits in the protection system have reached 84 billion pounds ($ 6.4 billion), Nebati reportedly told Anadolu on Tuesday.

“By developing instruments such as new deposit accounts with hedging against currency fluctuations and increasing the attractiveness of the pound, we will reduce inflation,” he said, adding that once stability is achieved, Ankara will boost production and exports.

Nebati said work would be done to attract domestic gold to the financial system, while the state’s contribution to the private sector pension system would increase to 30% from 25%.

The corporate tax will become more competitive and the value added tax will be simplified, among various planned measures, he added.