The Turkish Central Bank announced on Thursday that it raised the interest rate by 500 basis points to 40 percent on repo operations for a week.

This came during a meeting of the Central Bank’s Monetary Policy Committee, headed by the Bank’s Governor, Hafiza Ghaya Arkan, according to a statement issued by the bank.

The statement stressed that the improvement in external financing conditions, the continuous increase in reserves, support for balancing demand for the current account, and the increase in domestic and external demand for Turkish lira assets contribute strongly to the stability of the exchange rate and the effectiveness of monetary policy.

Last month, the Central Bank raised the interest rate by 500 basis points to 35 percent on one-week repurchase operations.

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Standard & Poor’s International announced on Friday evening that it had raised its outlook on Turkey’s credit rating from “negative” to “stable.”

The agency said in a statement that it confirmed Turkey’s credit rating at “B” and raised its future outlook from “negative” to “stable” due to “policy change.”

The statement indicated that the new economic administration in Turkey raised the interest rate by 21.5 points since June to reach 30 percent in order to combat inflation and reduce the exchange rate, and imposed some indirect taxes to achieve financial balance.

It stated that Turkey’s economy is expected to grow 3.5 percent this year and 2.3 percent next year.

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Turkish Minister of Treasury and Finance Noureddine Nabatai announced the improvement of all macroeconomic indicators for the country, with the exception of the inflation rate.

This came in statements he made on Wednesday.

Nabati said, “There is a complete improvement in all of our macroeconomic indicators, with the exception of inflation, which rose in all countries of the world during 2022.”

He stressed that the recent measures, such as improving wages and the status of retirees, are not directed at the elections, but on the contrary, they should be considered as sharing the gains with the citizen.

The minister called on all concerned authorities in Turkey to contribute to combating inflation.

He pointed out that the peak point in the “Turkish Lira Deposit” mechanism that is protected from exchange rate fluctuations amounted to 1.47 trillion liras (the dollar is equivalent to about 18.78 liras).

The aforementioned mechanism was launched by Turkey at the end of 2021, as it guarantees the depositor in lira that he will not fall victim to exchange rate fluctuations, and also guarantees him obtaining the declared interest, in addition to the difference in the price of the dollar between the times of deposit and withdrawal.

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The exchange rates of the dollar and the euro against the Turkish lira came in Monday’s trading in Istanbul at 09:00 (06:00 GMT) as follows:

Istanbul           Buy           Sale

U.S. dollar      18,1110     18,1130

euro              18,1790    18,1810

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Turkish President Recep Tayyip Erdogan announced the reduction of the value-added tax imposed on basic food commodities from 8 to 1 percent.

President Erdoğan, visually from Vahiddin Palace in Istanbul, participated in the promotional meeting for the Turkish economic model, new steps and anti-inflation measures, which was held at the Istanbul Congress Center.

Erdogan pointed out that the goods included in the reduction of value-added tax have a large share in the inflation basket.

“We are moving forward on the path of developing our country’s economy through investment, employment, production, export and the current account surplus,” he said.

He pointed out that the global economy is suffering from the impact of the sharp rise in commodity prices, especially energy and food.

Because of the imbalance in the financial markets and the high rates of inflation and that these fluctuations affect Turkey as well.

Erdogan stressed the stability of the exchange rates of the lira against foreign currencies and curbing fluctuations through the package of economic measures recently taken.

He added that Turkey aims to eliminate the effects of high inflation to a large extent during 2022.

He explained that Turkey has fought through all available means the attacks that targeted its economy.

He also expressed his hope that the food sector will make 7 percent reductions as of Monday, bringing the total reductions imposed on basic food commodities to 14 percent.

He continued, “We would like to see a similar approach from all other sectors by making cuts at this level (7 percent) that will be reflected directly on our citizens as of Monday.”

The Turkish president called on all citizens to join the fight against inflation.

He continued, “For the first time in our history, we have exceeded 30 million in employment. Our exports are increasing at a record rate every month. There is a noticeable increase in the interest of international investors in our country.”

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Turkish Treasury and Finance Minister Nureddin Nebati said that he expects the inflation rate to reach its peak by next April, and that it will not exceed 50 percent.

In a statement to the Japanese newspaper, Nikkei Asia, Thursday, Nikki explained that Turkey suffers from the problem of inflation, as do the rest of the world.

He added that inflation will begin to recover in the summer and will show a drastic decline in next December.

He indicated that he does not expect any other negative developments in the Turkish lira, and any decline in the exchange rate.

He stressed that there would be no imbalance between the exchange rate when he was appointed as Minister of Finance and at the end of this year.

Vegetarian stated that the expectations for the growth of the Turkish economy this year are about 5 percent, according to the medium-term economic program.

And about the size of Turkish lira deposits according to the deposit system protected from exchange rate fluctuations.

The Turkish minister said that as of last Tuesday, the volume of deposits amounted to 272 billion liras, noting that 113 billion liras of the total deposits were from the sale of foreign currencies.

Nabati emphasized that the new economic model based on low-interest rates would increase production, employment and exports.

It solves the problem of the current account deficit, and contributes to the stability of the Turkish lira.

He added that the risks of the new economic model were overcome during the past year, and that only the rebound shocks of inflation remain, which will be largely settled during the current year.

Official data showed on Thursday that the consumer price index (inflation) in Turkey rose by 11.10 percent in January on a monthly basis, to reach 48.69 percent on an annual basis.

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The Central Bank issued the text of the monetary policy and exchange rates for the year 2022, and accordingly, the medium-term inflation target was set at 5%, the Central Bank announced its monetary policy and exchange rates for the year 2022.

The medium-term inflation target was set at 5 percent, and the text stated that “monetary policy will be shaped in such a way that inflation will gradually bring inflation closer to this target,” and it also stated that the inflation targeting regime will continue.

According to the roadmap, the floating exchange rate regime will continue next year, the exchange rates are formed in free market conditions according to the balance of supply and demand, and the main policy instrument will remain the one-week repurchase rate.

The central bank will continue to increase its reserves next year, the reserve option mechanism will be completely terminated, the costs of foreign currency liabilities will be increased.

Priority will also be given to mechanisms that will support the development of Turkish lira deposits. In addition, swap amounts will be reduced, and the Central Bank will give priority to the principles of transparency, predictability, and accountability.

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Turkish Energy and Natural Resources Minister Fatih Donmez said on Wednesday that the value of Turkish investments in the African continent has reached 6 billion dollars.

This came in a speech by him via video conference during the second meeting of the Turkish-Angolan Joint Economic Committee.

He pointed out that the number of projects implemented by Turkish contractors in Africa has reached 1,500, pointing out that the economic volume of those projects exceeded $70 billion.

Donmez noted that economic and trade relations with Angola have developed rapidly in the recent period.

He explained, “Looking at the trade figures for 2020, it is clear that the volume of trade between the two countries is $250 million.

Turkey to Angola constitutes 183 million dollars and 67 million dollars from Angola to Turkey.”

He pointed out that they aim to increase activities that would bring the private sector in both countries together, and businessmen more together.

For his part, the Angolan Minister of Oil and Natural Resources Diamantino Pedro Asuedu expressed his confidence that the two sides will contribute to cooperation in the field of energy in the next stage.

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Global gold prices rose on Tuesday to a three-week high, surpassing $1,800 an ounce, supported by a drop in the dollar index.

And at (7:25 GMT), the yellow metal rose in spot trading by $ 14, or 0.78 percent.

To trade at $1805.81 an ounce, the highest level since the June 16 session.

And gold futures prices increased from August by $22.7, or 1.27 percent, to $1,806 an ounce.

Gold prices benefited from a decline in the dollar index by 0.37 percent against six major currencies to 92.078.

The market is awaiting the results of the last Fed meeting, in which it expected the start of raising interest rates by 2023, as the minutes of the meeting will be revealed tomorrow, Wednesday.

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The group of oil producers “OPEC +” decided on Friday to postpone its meeting until Monday after it failed for the second day in a row to reach a production agreement.

The group said in a brief statement: “The 18th ministerial meeting of OPEC and non-OPEC ministers (OPEC +) has been postponed today, and will resume on Monday, July 5, 2021.”

And on Thursday, the meeting of “OPEC +” ministers began, but they decided to suspend it after talks that lasted for more than 5 hours without reaching an agreement, which was repeated today as well.

The postponement of the meeting for the second day in a row reflects the depth of differences between the group’s countries regarding oil production policy during the next stage.

This is at a time when global markets are facing an increase in demand and a shortage in supply.

And the US agency “Bloomberg” quoted sources in the group as saying.

The main reason for its failure to reach an agreement “was the UAE’s opposition to a Russian-Saudi proposal to gradually raise production.”

According to the agency, the proposal provides for “a monthly increase during the period from August until the end of 2021, at a rate of 400,000 barrels per day each month.”

The proposal also provides for “extending production restrictions in force from April 2020 until the end of 2022, instead of the end of next April, as stipulated in the original agreement.”

And according to “Bloomberg”, the UAE “demands to raise the baseline of production on which the coalition is based in calculating its share of the cuts.

And to reach 3.8 million barrels per day instead of the current baseline of 3 million and 150 thousand barrels.

Raising the baseline means allowing the UAE to pump more crude oil into global markets.

Oil-consuming countries, led by India, the third-largest consumer of crude in the world, are calling on the “OPEC +” countries to pump more crude into the markets, with the acceleration of the global economic recovery from the repercussions of the Corona pandemic.

Consumer countries believe that withholding millions of barrels of oil from the market, and prices exceeding the $75 barrier, will increase inflationary pressures and impede global growth.

In May 2020, the “OPEC +” countries began unprecedented production cuts by 9.7 million barrels per day, which constitutes 10 percent of global consumption of crude.

Since then, those cuts have been scaled back, down to the current 5.8 million barrels per day.

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