US dollar growth to not lead to economic crisis in Turkey, says minister

Türkiye Materials 11 March 2015 17:40 (UTC +04:00)
The growth of the US dollar rate in Turkey will not lead to an economic crisis.
US dollar growth to not lead to economic crisis in Turkey, says minister

Baku, Azerbaijan, March 11

By Rufiz Hafizoglu - Trend:

The growth of the US dollar rate in Turkey will not lead to an economic crisis, the Anadolu Agency quoted the Turkish Development Minister Cevdet Yilmaz as saying on March 11.

He said the growth of the US dollar rate is recently being observed not only in Turkey, but also in a number of other countries.

"It is expected that the central bank of Turkey will soon take the growth of dollar under its control," he added.

Turkey's President Recep Tayyip Erdogan will on March 11 meet with the Head of the Central Bank Erdem Basci. They will discuss the reasons for high inflation in the country.

It is also expected that the president will meet with Deputy Prime Minister Ali Babacan, who is in charge of economic issues in the government.

Earlier, Basci several times asked for a meeting with the president, but Erdogan declined to meet.

On Feb. 10, Erdogan criticized Basci's work, saying his policy harms the country's interests.

Turkey's central bank on Jan. 20 lowered its key interest rate (the weekly repo rate) by 0.5 percentage points to 7.75 percent, while the other two rates, that is, one on deposits and the other one on overnight loans were left at 7.5 and 11.25 percent respectively.

Turkish media earlier reported that a prosecutor of a court in Ankara, Serif Aydin, filed a lawsuit against Basci. The prosecutor accused Basci of serious material damage inflicted to Turkey's citizens as a result of an erroneous interest rate policy of the central bank.

The prosecutor said that, in case of a trial, the Turkish central bank's head can be imprisoned for up to two years. Meanwhile Ali Babacan had said that the central bank pursues the right monetary policy.

Basci had said the central bank in 2015 expects the minimum level of inflation in Turkey over the past 45 years. He said it is expected that this year the consumer price index in Turkey will stand at 5.2 percent, and in 2016 - at five percent. He said the country's central bank will do everything possible to keep inflation under control.

The inflation rate in Turkey was 8.31 percent in 2014. To keep the exchange rate of Turkish lira at a stable level, Turkey's central bank carried out intervention worth $2 billion throughout 2014, however this attempt was unsuccessful.

The process of strengthening the lira (by 9.4 percent) in 2014 continued until September of that year. The exchange rate of the national currency started cheapening in the subsequent months. (The dollar exchange rate in Turkey increased by 7.4 percent by the end of 2014).

The Turkish lira hit record lows against the US dollar on Mar. 6, 2015 reaching 2.6862.

The official exchange rate on Mar.11 is 2.6270 TRY/USD.

Edited by SI


Follow the author on Twitter: @rhafizoglu