Turkish minister says dollar hike is due to 'speculative news'

Turkish minister says dollar hike is due to 'speculative news'

Turkish minister says dollar hike is due to speculative news

Fluctuations in the Turkish Lira’s value against the U.S. dollar are not reflective of the actual strength of the Turkish economy and are speculative, the Turkish economy minister said on Oct. 27.

Speaking to the Anadolu Agency, Nihat Zeybekci said the Turkish Central Bank should not seek to intervene in foreign exchange markets in direct ways, like selling dollars.

“The bank should not touch speculative movements in the markets,” Zeybekci said.

“This would be the most effective response,” he said.

The minister said if the bank intervened by selling foreign currency to a speculative movement, the volume of that movement would increase to a billion dollars from $30-40 million.

His comments came after the climb in the U.S. dollar/Turkish Lira exchange rate to 3.84 on Oct. 27– the highest level over the past nine months.

One U.S. dollar traded for 3.47 liras on average last month, while the nine-month average dollar/lira exchange rate was 3.60.

According to Turkish Central Bank data, the dollar/lira rate was 3.02 on average last year and 2.71 on average in 2015.

Zeybekci said the fluctuations were not only seen in the dollar/lira rate but also in other exchange rates.

“It is an extremely wrong approach to make an evaluation about the current trend of the dollar/lira rate by relying on speculative news,” said the minister.

On Oct. 26 “local currencies of some other countries like Hungary, Romania and Poland also depreciated against the U.S. dollar,” he said.

The “EUR/USD parity climbed to over 1.16, as the euro lost ground against the dollar by losing value of around 1.5 percent yesterday [Oct. 26.]”

Zeybekci also said the Turkish Central Bank’s decision to hold interest rates had been perceived positively.

On Oct. 26, the bank announced it decided to keep the one-week repo rate—also known as the bank’s policy rate—steady at 8 percent, following a Monetary Policy Committee meeting.

The economy minister also said Turkey’s economy would grow well above six percent in 2017, and “will close the year with an 11-12 percent annual rise in its exports, reaching a historic high record.”

Turkey would see a 30 percent increase in its tourism sector by the end of the year, which will contribute positively to foreign direct investments in the country, Zeybekci said.

He said he underlined that the Turkish economy was better than countries with comparable economies, such as Mexico, Brazil and South Africa.

According to the Turkish Statistical Institute (TÜİK), Turkey’s economy grew beyond expectations in the first quarter, by 5.2 percent, and by 5.1 percent in the second quarter.

Over the past three years, the country’s economy expanded 5.2 percent in 2014, 6.1 percent in 2015 and 2.9 percent in 2016.

Ankara is targeting growth of 5.5 percent this year as well as through 2020, according to the country’s medium-term economic program announced on Sept. 27.