Gov’t ‘following process for price deduction’: Minister
Consumer prices went up due to the increase in currency exchange rates, but the rates have come down and the prices should follow, Trade Minister Mehmet Muş said on Dec. 28.
“Yes, there was a cost increase due to exchange rate differences, but there has been a loosening in the exchange rates recently,” Muş said at an event organized by the Union of Chambers and Commodity Exchanges of Turkey (TOBB).
“As a result, there was a legitimate expectation among the citizens that the prices would decrease. I expect this expectation to be met, and we are following the process closely.”
The government will provide 5.2 billion Turkish Liras ($439.3 million) in support to exporters, said Muş.
President Recep Tayyip Erdoğan will announce the record-high export figures next week, he added.
Turkish exports hit $221 billion in the last 12 months at the end of November, while the figure reached $203.1 billion in the first 11 months of this year.
Muş’s remarks came after he attended the Price Stability Committee meeting led by Treasury and Finance Minister Nureddin Nebati.
Global inflation rates and developments in the commodity markets were evaluated during the meeting, a ministry statement said.
“Domestic inflation developments and risks to inflation outlook were considered in a holistic view and in detail. Within this scope, developments in exchange rates and commodity prices, and their effects on pricing behaviors were analyzed,” it added.
In a televised interview late on Dec. 27, denied claims that state lenders sold massive amounts of foreign currencies to strengthen the value of the lira last week. Meanwhile, the Banking Regulation and Supervision Agency (BDDK) filed a criminal complaint against former Central Bank governor and opposition deputy Durmuş Yılmaz and 25 other people, including well-known economists, over those claims. BDDK alleged that those people resorted to manipulation on social media.
The total amount in the newly designed FX-protected lira deposit accounts increased by 28 billion Turkish Liras ($3.2 billion) in a week, Nebati said.
The lira gained value by nearly 40 percent against foreign currencies since the new banking products, which were initiated by the Treasury and the Central Bank, were announced on Dec. 20. The Treasury and Finance Ministry on Dec. 24 introduced a cap of 17 percent to interest rates to be applied to the FX-protected deposit accounts.
According to the scheme, the interest rates on deposits and the exchange rates at the opening and the maturity date of the deposit accounts will be compared, and the deposit holders will be remunerated from whichever is higher.
No withholding tax will be levied as part of the scheme, which encourages people to hold lira savings rather than foreign currencies. In recent days, private banks joined state lenders and participation banks to offer rates above 15 percent for FX-protected lira deposit accounts.