Politics firmly holds the set of Turkish lira- Property Turkey

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The Turkish lira strengthened last week, rising 1% to a level not seen since early August.

The gathering came after three months of steady growth following the announcement late last year that Turkey would tighten its monetary policy in the foreseeable future.

The lira has risen more than 6% this year and 23% since the end of 2020, making it one of the best-performing currencies in all emerging markets and offering some much-needed hope after a low of 8.58 in November. The upward trend is partly due to measures such as an increase in the country’s central interest rate from 10.25% to 17%.

New Central Bank Governor Naci Agbal has vowed to maintain tight monetary conditions until inflation falls to a more manageable level. Inflation rose to almost 15% last month, and analysts predict the bank will maintain stable interest rates, waiting for inflation to rise as the lira continues to strengthen.

Welcome shift

The International Monetary Fund has put pressure on Turkey’s recent change in economic policy, saying the new measure is welcome and key to achieving the country’s goals.

The head of the IMF mission in Turkey, Donal McGettigan, said that Turkey, like other countries, had to survive deep shocks last year, in addition to economic disruptions.

Given that the pandemic had reached the end of the first year and that there was still a lot of work to be done, efforts were needed to sustain the Turkish economy, despite its flexibility and resilience, McGettigan said.

“First, to renew tampons to protect against shocks in an uncertain world, and second, to further strengthen Turkey’s core economic potential so that it can achieve strong and sustainable growth and employment in the years to come,” he said.

The recent policy change was welcome, but also timely, and the continuation of monetary policy is likely to bring much-needed stability in confidence at home and abroad, McGettigan said.

He also added that it would be critical to implement reforms in Turkey’s corporate sectors and introduce labor market reforms.



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