Istanbul, June 6 / BNA /: The Turkish lira fell beyond 16.55 against the dollar on Monday, bringing its losses to more than 20% this year, due to fears of inflation rising to a 24-year high, the Finance Minister promised. This rate will remain constant.
The lira weakened up to 16.57 against the US currency by 0706 GMT. Recent losses have brought it back toward record lows hit on Dec. 20 in a currency crisis triggered by a series of unconventional interest rate cuts in late 2021, Reuters reports.
The lira plunged 44% last year and was the worst performer in emerging markets for several consecutive years due to economic and monetary policy concerns.
On Monday, Milliyet newspaper quoted Finance Minister Nureddin Nabati as telling lawmakers from Erdogan’s ruling Justice and Development Party at a weekend meeting that neither a near-term rate hike nor a cut had been considered.
He expected annual inflation to be around 48-49% at the end of the year, dropping to 19.9% by the end of 2023. Earlier this year, he had promised single digit inflation in elections scheduled for June next year.
He was quoted as saying that the forex-protected lira deposit scheme, which was launched after the lira hit a record low in December, will continue and will cost the budget 21.1 billion lira ($1.29 billion) as of Friday.
The falling lira, the war in Ukraine, and rising energy prices pushed Turkey’s annual consumer price inflation to 73.5% in May, the highest level since 1998. Inflation began rising last fall after a 500 basis point easing cycle.