May 09 2018

Turkey to discuss lira's losses, trade at economic summit

Turkish officials will discuss recent losses for the lira at a summit meeting called by President Recep Tayyip Erdogan on Wednesday, said Ibrahim Kalin, the presidential spokesman.

The lira has been “on the agenda” for the past few weeks, Kalin said, adding that losses for the currency reflected general volatility in global markets. There are now many dynamics at work, including higher oil prices and a decision by U.S. President Donald Trump to withdraw from a multilateral agreement on Iranian nuclear power, he said.

“If a clear message is to be given, then it’s that the president’s and government’s policies of financial discipline will continue,” Kalin told reporters on Wednesday.

Turkey’s lira hit an all-time low of 4.37 per dollar on Wednesday, prompting Erdogan to call the meeting. The currency reversed those losses, trading up 1.1 percent at 4.2838 per dollar at 1:42 p.m. in Istanbul, on expectation that the government will give the go-ahead for the central bank to increase interest rates substantially to defend the lira.

Kalin made no mention of rate hikes in the statement, saying it would be wrong to talk about the meeting’s content. He said the government would also address the balance of trade, employment and manufacturing investments during the discussions.

“These kind of meetings are held by the state apparatus from time to time,” he said. “It would be wrong to say there’s panic or something extraordinary here.”

Asked if the government planned to implement a package of measures to arrest the lira’s decline, he said the prime minister had already announced a package on the economy during a recent visit to South Korea and it would be wrong to label any further measures as such. Kalin also referred to an announcement by the finance ministry on Wednesday concerning an amnesty for repatriated assets.

The central bank raised interest rates by 75 basis points two weeks ago to 13.5 percent in an effort to stem the lira’s decline. The currency traded at 4.089 per dollar before that decision.