Türkiye's Simsek Says Disinflation to Continue, FX Pass-through Limited

A fisherman feeds cats his recently caught small fish from the Marmara Sea, along the Kadikoy sea promenade in Istanbul, Türkiye, Tuesday, April 15, 2025. (AP)
A fisherman feeds cats his recently caught small fish from the Marmara Sea, along the Kadikoy sea promenade in Istanbul, Türkiye, Tuesday, April 15, 2025. (AP)
TT
20

Türkiye's Simsek Says Disinflation to Continue, FX Pass-through Limited

A fisherman feeds cats his recently caught small fish from the Marmara Sea, along the Kadikoy sea promenade in Istanbul, Türkiye, Tuesday, April 15, 2025. (AP)
A fisherman feeds cats his recently caught small fish from the Marmara Sea, along the Kadikoy sea promenade in Istanbul, Türkiye, Tuesday, April 15, 2025. (AP)

Turkish Finance Minister Mehmet Simsek said on Friday that disinflation would continue despite some recent deterioration in expectations, adding that the government still sees inflation ending the year within its target range.

His remarks come a day after the central bank delivered a surprise 350 basis-point rate hike to 46%, reversing a short-lived easing cycle and signaling renewed commitment to tackling inflation.

The move followed weeks of market turmoil triggered by the March arrest of Istanbul Mayor Ekrem Imamoglu, President Recep Tayyip Erdogan's main political rival.

"The recent deterioration in expectations may have had some effect, but we believe we will stay within the target by year-end," Simsek said.

The central bank's unexpected hike marked a shift from the easing that began in December, aiming to anchor inflation expectations and stabilize markets.

Economists expect the lira's recent weakening to feed into April and May inflation, though annual inflation slowed to 38.1% in March. The bank's year-end forecast remains at 24%.

Simsek also said the impact of exchange rate pass-through on inflation would remain limited due to weak domestic demand, and noted that recent financial market volatility could cause a temporary slowdown in economic activity.

"We are approaching a threshold where we can achieve moderate growth without generating a current account deficit," he added.

The lira had plunged to a record low and Turkish assets took a hit before the central bank intervened with reserve sales and tighter funding conditions.

The bank said the recent market turbulence was expected to slightly lift April inflation readings and reiterated that further tightening would be considered if inflation risks persist.



Gold Eases on Firmer Dollar, Solid US Data

A person passes by a gold shop in Ankara, Turkey May 29, 2023. REUTERS/Yves Herman/File Photo
A person passes by a gold shop in Ankara, Turkey May 29, 2023. REUTERS/Yves Herman/File Photo
TT
20

Gold Eases on Firmer Dollar, Solid US Data

A person passes by a gold shop in Ankara, Turkey May 29, 2023. REUTERS/Yves Herman/File Photo
A person passes by a gold shop in Ankara, Turkey May 29, 2023. REUTERS/Yves Herman/File Photo

Gold prices edged lower on Thursday, weighed down by a stronger dollar and robust US economic data, while caution persisted as markets awaited clarity on tariff developments.

Spot gold fell 0.3% to $3,337.43 per ounce by 0155 p.m. EDT (1755 GMT) after hitting a session low of $3,309.59.

US gold futures settled 0.4% lower at $3,345.3.

Following the latest US data, "there was a bit of rise in the dollar and US Treasury yields are higher. So, it's put a little weakness in the gold market," said Bob Haberkorn, senior market strategist at RJO Futures, Reuters reported.

The dollar gained 0.3%, making the greenback-priced gold more expensive for foreign currency holders.

US jobless claims fell last week, pointing to steady job growth in July, while retail sales data beat expectations, adding 0.6% last month, though some of the gain likely reflected tariff-driven price increases.

Fed Governor Adriana Kugler said the Fed should not cut interest rates "for some time" as the impact of Trump administration tariffs begins to pass through to prices.

Gold is often regarded as a hedge against uncertainty and inflation, but higher interest rates diminish its appeal, as it yields no interest.

On the trade front, Japan's top trade negotiator held talks with the US Commerce Secretary on US tariffs, as Tokyo races to avert a 25% levy that will be imposed unless a deal is clinched by an August 1 deadline.

"If Trump follows through on his threats and trade tensions escalate, it’s not a stretch to imagine gold challenging — and potentially breaking- its record highs again," said Fawad Razaq, market analyst at City Index and FOREX.com.

Meanwhile, gold exports from Switzerland jumped 44% month-on-month in June as bullion flew back to the vaults in the United Kingdom from the US via Swiss refineries, Swiss customs data showed on Thursday.

Palladium was up 3.8% at $1,277.78, reaching its highest level since September 2023.

Fears of an escalating war in Russia, a major palladium exporter, are fuelling supply concerns and driving prices higher, Haberkorn said.

Elsewhere, spot silver added 0.3% to $38.07 per ounce and platinum gained 3.1% to $1,460.13.