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Turkish Ministry of Finance: Rising energy prices are accelerating the rise of inflation

Turkish Finance Minister Nuredin Nebati said today that global energy prices were accelerating inflation, but that Ankara would continue to work to reduce it, adding that the recent fall in the pound was within “acceptable” levels. according to Reuters.

Inflation reached 54% in February and economists expect it to continue to rise to 70% in the coming months, as Russia’s invasion of Ukraine sent commodity prices soaring and the pound plummeted.

Speaking at a business conference in Antalya, Nebati said a government-backed program that protects pound deposits from depreciating has helped allay concerns about what he called “attacks” on the pound exchange rate.

“What we have seen in recent months is that the exchange rate is stable and moving forward within acceptable limits,” he said.

The pound has fallen 11 percent against the dollar this year, largely due to the economic implications of Russia’s invasion of Ukraine.

The currency had fallen 44% last year, mainly after a series of interest rate cuts sought by President Tayyip Erdogan, which sparked a currency crisis and sent inflation to a 20-year high.

The pound protection program as well as costly central bank interventions in the foreign exchange market helped halt the monetary crisis in December.

The central bank cut interest rates by 500 basis points to 14% between September and December, but kept it unchanged for the last three sessions.

Erdogan’s new economic plan prioritizes the current account surplus, exports, credit and growth, while keeping interest rates low.

However, Russia’s actions in Ukraine risk widening Turkey’s current account deficit due to rising commodity prices and a possible drop in tourism revenues.

Source: Capital

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