Turkish lira weakens to another record low against dollar after poor inflation data
ANKARA/ ISTANBUL
Turkey’s currency hit another record low against the dollar on the morning of May 3 after official data showed the inflation rose higher than expected in April.
The Turkish lira, one of the worst performing emerging market currencies this year, weakened to a record low of 4.2487 against the dollar, from the May 2 close of 4.1785. It was later eased to 4.1885 in the May 3 afternoon.
Sentiment toward Turkish assets had already been hit this week, after Standard & Poor’s cut Turkey’s sovereign rating further into junk territory and a survey showed manufacturing contracted last month.
The S&P move and the government’s announcement of a $6 billion incentive package “reignited market concerns about the overheated economy at a time when inflation is rising,” said Piotr Matys, a London-based Rabobank strategist, as quoted by Reuters.
The consumer price index exceeded forecasts by climbing 1.87 percent month-on-month in April, the Turkish Statistical Institute (TÜİK) said, for a rise of 10.85 percent year-on-year, driven by significant increases in clothing and transportation prices.
Core “C” CPI inflation was 12.24 percent year-on-year, up from 11.44 percent on a year-on-year basis.
The highest monthly increase was 10.4 percent in clothing and footwear in April, according to TÜİK data.
In April, the indices rose by 3.54 percent for transportation and by 2.32 percent for miscellaneous goods and services.
The highest monthly decrease was in food and non-alcoholic beverages, which fell by 0.21 percent.
The highest annual increase was 16.75 percent in furnishing and household equipment.
Transportation prices rose by 16.45 percent and clothing and footwear by 12.03 percent in the same period.
The Central Bank on April 30 lifted its end-2018 inflation forecast to 8.4 percent, when it announced its quarterly inflation report. Its inflation target is 5 percent.
Producer prices rose 2.6 percent month-on-month in April for an annual rise of 16.37 percent, a separate TÜİK report showed on May 3.
