Central bank behaviour shows confidence in lira insufficient – columnist

Policies adopted by Turkey’s central bank show that the economic authorities need to boost confidence in the lira, said Ibrahim Kahveci, columnist for the pro-government Karar newspaper.

The central bank has both increased interest rates and the amount of money it makes available to banks during the course of the year, Kahveci said. Average funding costs are now far higher than they were previously but banks continue to borrow more, he said.

The funding reached an average of 130 billion liras daily in December at an interest rate of 12.3 percent. That compared with 80.2 billion liras per day at 8.9 percent in January, Kahveci said. In the meantime, the foreign currency deposits held in Turkish banks are increasing, he said.

The size of the funding and interest rates, which are following inflationary trends but not exceeding them, shows that the central bank’s monetary policy is far from tight, Kahveci said.