The pass-through from currency weakness to inflation will be limited but the weakness in TRY is likely to lead to a significant adjustment in the current account deficit, finance minister Mehmet Simsek wrote on his twitter account.
Turkey’s macroeconomic fundamentals are strong, banking sector is healthy, strong public finances provide significant room to respond to shocks, Simsek added. There is a challenging domestic and external backdrop; however, a pretty negative scenario is largely priced in, according to the minister.
2014 budget is based on fairly conservative revenue assumptions and the government will accelerate privatizations to reduce public sec borrowing requirements, the minister said.
Most important of all, public support for the ruling AKP remains strong, hence, the political stability is not at stake, Simsek stressed.
The Central Bank raised the volume of its forex-selling auction on Friday (Dec 30) to a minimum USD 600mn from USD 450mn but TRY sank to another record low and Turkish stocks were at their weakest since July 2012 as political tension mounts.
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