Minister of Treasury and Finance Mehmet Şimşek conveyed the message “We do not have an exchange rate target” during the Bloomberg HT-Habertürk joint broadcast.
Şimşek said the following regarding the issue:
“We do not have an exchange rate target, and we will not have one. The Central Bank is present in the market through the DDM. Apart from that, they say we do not have any interventions.
Expectations of the lira’s depreciation after the elections do not seem significant. The current account deficit is decreasing. Our need for foreign currency is also decreasing. When the current account deficit decreases to around $30 billion, it means a rate of 2.5-3 percent. If we finance one point of this directly with investments, we will have reserve accumulation.
Last year, there was a net portfolio outflow in the first five months. This year, there is a net inflow. The disinflation process globally will increase interest in emerging markets. There will be significant capital inflows to Turkey after the elections.
International organizations will provide us with significant resources. We expect $12.7 billion in project loans this year. Last year, $8.8 billion in project loans were received.
The annual policy rate is equivalent to around 56 percent. The deposit rate is at the 50s level. There is a policy set that supports the Turkish lira.”
We neither want an excessively strong nor excessively weak Turkish lira.
In an environment where election uncertainty has been removed, why would the Turkish lira depreciate more than inflation?
I respect the portfolio preferences of citizens. I do not want to provide guidance on this matter. When our program is successfully implemented, there will be no real depreciation of the Turkish lira. In successful disinflation programs, the local currency has gained real value.”