Central Bank of Turkey, banks discuss prices after collapse of lira | Business and Economic Affairs

Central Bank Governor Sahap Kavcioglu said after his meeting with top banks and BDDK bankers that banks and all their partners are ‘very close’.

A central bank spokesman in Turkey said he discussed the recent decline in interest rates with banks at a meeting on Thursday after a slide in the lira to record lower rates, and added that banks were able to overcome market volatility.

The Turkish lira was broken Thursday after a long decline this week, initiated by President Tayyip Erdogan in defending interest rates, despite strong opposition to his policy.

Governor Sahap Kavcioglu said after a meeting with top banks and BDDK bank administrators in the country that he reviewed the economic performance, and said the banks are very strong.

“We informed them of everything, whether it was to reduce interest rates and so on,” Kavcioglu told reporters after the meeting. “The divisions, the central bank and BDDK are closely related and strongly connected.”

The lira was not exchanged after the meeting, selling 0.5 per cent firmer at $ 12.025 for a dollar. Before returning in the last two days, it fell by 13.45 Tuesday, down 45 percent this year, which affected the 11-point decline in a row.

Global and domestic events, markets and banking events were discussed at the conference on Thursday, the Association of Turkey Banks said in a statement, describing the conference as “very rewarding”.

One of the market participants said BDDK told the conference that it would look at ways like the national currency.

BDDK was not immediately available for comment.

Separately, officials told Reuters Erdogan that he had ignored complaints, even within his own government, to change his mind.

Inflation on ‘volatile course’

The central bank said earlier on Thursday the rise in inflation was following a volatile trend in the short term.

It commented during the minutes of the finance committee meeting last week, where it cut its prices by 100 bases to 15 percent. It has lowered the level by a total of 400 points since September.

“The central bank can accelerate the demise of the crisis by demonstrating a reduction in inflation and the willingness to use inflation to protect the currency,” a statement from the Institute of International Finance said.

“This will help restore expectations of inflation, which is rising as a result of FX through devaluation, increasing the risk of a dollar increase. We still maintain our fair value as $ / TRY 9.50.”

Many Turks, already struggling with inflation by about 20 percent, inflation will rise. Opposition politicians have accused Erdogan of dragging the country forward.

Erdogan has defended the principles of the central bank and pledged victory in his “independent financial war”, forcing the central bank to move harder with a view to promoting exports, money and jobs.

But many economists have also said the reduction in prices is careless and opposition politicians want elections to be held soon, Turks told Reuters.