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Turkish Finance Minister Sees Single-Digit Inflation by Mid-2023

Turkish Finance Minister Sees Single-Digit Inflation by Mid-2023

Sunday, 16 January, 2022 - 10:15
A market in the Turkish capital, Ankara. (Reuters)

Turkey’s annual inflation rate will be in single digits by the time presidential and parliamentary elections set for mid-2023 are held, Finance Minister Nureddin Nebati said on Saturday.

“With fiscal policies and the steps that we will take, we will enter the elections... next year with single-digit inflation,” Nebati said.

Inflation hit a 19-year high of 36% in December after the central bank slashed interest rates under pressure from President Recep Tayyip Erdogan, causing a currency crisis that led to the lira shedding 44% of its value in 2021.

Speaking to heads of non-governmental organizations in Istanbul, Nebati said the conversion of forex holdings to Turkish lira will accelerate in coming weeks.

Meanwhile, the central bank delayed implementation of a fee for US dollar and euro accounts at banks that cannot encourage customers to turn to lira, according to a document sent to banks.

Last month, the central bank said a 1.5% commission will be imposed on foreign currency required reserves accounts of banks if they did not reach certain thresholds on conversion to lira.

The move was seen as a punishment for banks whose customers choose to keep savings in foreign currencies.

More than half of locals’ savings is in foreign currencies and gold, according to central bank data, due to a loss of confidence in the lira after years of depreciation.

The lira fell more than 40% against hard currencies last year alone.

The currency had slumped to a record low of 18.40 in to the dollar in December before the government and central bank announced steps to protect lira deposits from foreign exchange depreciation.

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