Top Turkish businessman concerned about lira, inflation
Turkish companies need currency stability along with low inflation and interest rates, said Nihat Özdemir, the founding chairman of industrial group Limak Holding.
“Stability means a stable exchange rate in the long term, low levels of inflation and a decline in interest rates,” Özdemir said on Tuesday, according to the Dünya newspaper.
“If there are any problems – in other words, volatility in any one of these three areas – then it makes both Turkish businesspeople and foreign investors uncomfortable,” he said.
Turkey’s annual inflation rate rose to 16.2 percent in March, the highest level since July 2019, from 15.6 percent the previous month, the Turkish Statistical Institute reported on Monday. Producer price inflation accelerated to 31.2 percent, the most in more than two years.
Özdemir said that he expected the central bank to keep interest rates on hold at a meeting of its Monetary Policy Committee on April 15. Hopefully keeping rates high will help to strengthen the lira and put the economy on solid footing, he said.
Limak is keeping investments on hold until the situation in the economy stabilises somewhat, Özdemir said, pointing to his company’s debts.
A large amount of Limak’s debts are in foreign currency, Özdemir said. While it has significant revenues in foreign exchange from airports and highway construction projects, it also earns money in liras from sectors including the energy industry, he said.
Turkish President Recep Tayyip Erdoğan replaced central bank governor Naci Ağbal early last month after he increased interest rates to 19 percent from 17 percent. Şahap Kavcıoğlu, Ağbal’s successor, has pledged to make the battle against inflation a priority.
The lira has dropped by 11 percent against the dollar since the management change due to concern among investors that Kavcıoğlu will cut rates as early as this month. Kavcıoğlu has sympathised with Erdoğan’s view that high interest rates are inflationary, an assertion that contradicts with conventional economic wisdom.
The lira traded down 0.6 percent at 8.14 per dollar on Tuesday.