The volatility in TRY is totally speculative and temporary, economy minister Nihat Zeybekci was quoted as saying by the Anadolu news agency on March 6, only a day after TRY hit a record low against the dollar.
Zeybekci also said he agrees with President Recep Tayyip Erdogan’s call for deeper rate cut. The Central Bank refuses to cut rates and the Bank’s this stance is an indication of the Bank independence, Zeybekci argued.
Erdogan’s comments on the Central Bank and its governor Erdem Basci have unnerved investors, sending TRY to an all-time low of 2.63 on March 5. In the face of the currency volatility, PM Ahmet Davutoglu, accompanied by Deputy PM Ali Babacan and finance minister Mehmet Simsek, held a series of meetings this week with banks in the U.S to calm investors.
Even though Davutoglu said that the talks went very successfully, the comments were very encouraging; Reuters commented that efforts by Davutoglu to reassure New York investors, who hold more than a fifth of the main Turkish stock index, appeared to have had little immediate effect. “There is a fear that we are facing a scenario where for the first time in 12 years not even Babacan has been able to convince investors. The selling is largely foreign”, a forex trader in Istanbul told Reuters on March 5.
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