Posted: Wednesday, May 25, 2022 – 5:10 AM | Last Updated: Wednesday 25 May 2022 – 5:10 p.m.
The Turkish central bank continued to depreciate against the Turkish lira against the dollar during trading on Tuesday, with a decline in foreign exchange reserves and a continuation of flexible monetary policy. Inflation in Turkey cannot be allowed to be controlled.
The Bloomberg News Agency lira fell 1.5 percent to more than 16 16 a dollar, the lowest level since the financial crisis that hit Turkey late last year. The Turkish currency, especially as energy prices continue to rise, shows almost no signs of recovery.
Consumer prices in Turkey have been rising at an annual rate of 70% over the past month, significantly higher than the Turkish central bank’s target rate of 14% per annum.
Per Hammerland, head of SEB’s emerging market management in Stockholm, Sweden, noted that “pressure on the lira is mounting,” adding that “high inflation, indicators of a slowdown in the economic growth of Turkey and its key partners, and a seriously worse currency. Policy.”
At the same time, as foreign exchange reserves have declined in the current month, the Turkish central bank has reduced the financial resources it can use to stabilize the exchange market.
Data released by the Turkish Central Bank last Friday shows that Turkey’s foreign exchange reserves have fallen sharply in the week ended May 13 this year, indicating the rising cost of efforts to support the Turkish lira.
The Bloomberg News Agency cited central bank data showing that foreign exchange reserves declined by $ 4.8 billion in the week under review, bringing the country’s total reserves to $ 61.2 billion, enough to offset its imports for about 10 months.
Christian Macyo, an economist at London-based DT Securities, said in a note to clients that the weekly decline in Turkey’s foreign exchange reserves was a “shock” and a sign that Turkey was continuing its “failed swim against the tide”.
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