Turkey should not be concerned about the local currency weakening, said economy minister Namik Zeybekci on April 20 as TRY weakened 0.78% d/d against the dollar to 2.6990. The lira has been the worst performing EM currency this year.
The local currency has been under pressure on investors’ concern over political uncertainty as the country heads for general elections in June. Analysts think the central bank will not raise interest rates to shore up the embattled currency because of pressure from politicians. The bank’s monetary policy committee will meet on April 22 to review interest rates but it is expected to keep the rates unchanged at their current levels.
The dollar has strengthened globally and the lira weakness is not due to home-grown problems, said Zeybekci, adding that the local authorities should not intervene to prop up the lira.
On a related note, when asked about President Recep Tayyip Erdogan’s recent comment that the Turkish economy is in a temporary crisis but it will be overcome, finance minister Mehmet Simsek said in a televised interview on CNN Turk, on April 20 that Turkey’s economic growth has slowed but this is not an economic crisis.
GDP grew by 2.9%, the economy created 1.3mn jobs last year and real interest rate is close to zero, said Simsek, adding that given this picture he could not say the economy is in a crisis.
| Policy Rate (%) | |
| Date | one-week repo |
| May-2010 | 7.00 |
| Dec-2010 | 6.50 |
| Jan-2011 | 6.25 |
| Aug-2011 | 5.75 |
| Dec-2012 | 5.50 |
| Apr-2013 | 5.00 |
| May-2013 | 4.50 |
| Jan-2014 | 10.00 |
| May-2014 | 9.50 |
| Jun-14 | 8.75 |
| Jul-14 | 8.25 |
| Jan-15 | 7.75 |
| Feb-15 | 7.50 |
| Source: Central Bank | |
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