The Turkish Central Bank announced on Thursday that it raised the interest rate by 500 basis points to 30 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, on Thursday.

The Turkish Central Bank confirmed in a statement that “the increase in local and international demand for Turkish lira assets will contribute significantly to price stability.”

It pointed out that tax regulations “have a significant impact on inflation rates due to cost-oriented pressures resulting from wages and exchange rates.”​​​​​​

The statement stressed that “foreign direct investments, improving external financing conditions, the continued increase in foreign reserves, and supporting tourism revenues for the current account will contribute to enhancing price stability.”

It pointed out that “the strong trend in domestic demand and the rise in oil prices is creating additional upward pressures on inflation.”

It stressed that the Monetary Policy Committee “decided to continue the process of monetary tightening in order to control inflation and the deterioration in pricing behavior.”

It also stated that the committee “will continue to make credit and quantitative tightening decisions in addition to increasing interest rates.”

It stressed that the committee will continue to make its decisions within a “transparent and predictable” framework and use all available tools in line with the main goal of “price stability.”

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The volume of Turkish foreign trade in local currency amounted to 349 billion and 488 million liras during the first half of this year, an increase of 129.3 percent compared to the same period last year.

According to data from the Turkish Ministry of Trade, the total volume of Turkish foreign trade between January and June 2023 amounted to $308 billion, an increase of 1.7 percent over the same period of the previous year.

Turkish exports increased in local currency during the aforementioned period compared to last year by 86.7 percent, to reach 94 billion and 580 million pounds, while imports amounted to 245 billion and 908 million pounds.

It should be noted that one dollar is equivalent to 26.06 Turkish liras, according to the exchange rates on Wednesday’s trading in Istanbul.

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Turkish President Recep Tayyip Erdogan said on Wednesday that his country will witness a rapid decline in inflation rates in the coming months.

This came in a speech he delivered during his participation in the meeting of the parliamentary bloc of the “Justice and Development Party” in the Turkish parliament in the capital, Ankara.

Erdogan stated that inflation in Turkey will decline to 30 percent in 2023, thanks to the measures taken by the government.

He added, “We have eliminated the causes that led to high inflation rates, and we have taken all necessary measures to bring down inflation.”

He stated that the government has proven to the inside and outside that no one will be able to control the Turkish economy through inflation and manipulation of currency exchange rates and interest.

He stressed that his government worked to compensate citizens’ losses resulting from inflation, addressed the causes leading to the high cost of living, and expanded the scope of social assistance.

The Turkish president stated that the number of labor force in Turkey reached its peak in the past year 2022, reaching 31.6 million people.

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Turkish Minister of Treasury and Finance Noureddine Nabatai expected that the country’s annual per capita income would exceed $10,000 in 2022, and more than $12,000 this year.

This came in a meeting held by Minister Vegetarian in Istanbul on Monday about his assessment of the past year 2022 and the goals of 2023.

Nabati explained that Turkey achieved significant success through its economic model in all macroeconomic indicators during the past year, noting that 2022 was one of the most difficult years of the century, with global inflation reaching historic levels.

He stated that starting from the middle of last year, the country’s economic administration worked to ensure the stability of exchange rates and to enhance financial stability.

The minister stated that the government contributed to an increase in gold reserves by 129 tons during the year 2022, indicating that it recorded its highest level in 8 years.

According to the data of the World Gold Council until the end of the third quarter of the year 2022, Turkey’s reserves of the yellow metal amounted to 488.87 tons.

He added that the Turkish economy grew during the first 9 months of last year at a rate of 6.2 percent, which reinforces the expectations of international institutions for the Turkish economy.

He explained that due to the impact of high growth, the annual per capita income is expected to exceed $10,000 last year, a figure higher than the expectations of the medium-term economic program.

He continued, “We also expect that the per capita annual income will increase during the current year to more than $12,000.”

Vegetarian stressed that the country has achieved growth records by establishing a solid ground through the Turkish economic model, and that the important part of this ground is the focus on production.

He pointed out that production increased by 20 percent compared to the period that preceded the Corona pandemic, and that this increase is equivalent to 5 times the increase in production in the European Union and 7.5 times the production of the United States.

With regard to the tourism sector, Nabati stated that their expectations for the past year are to reach revenues of $46 billion from 51.5 million tourists.

The Turkish minister stated that despite all the difficult circumstances in the year 2022, the performance of the general budget was the best during the past twenty years.

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Turkish Minister of Treasury and Finance Noureddine Nabatai stated that the protected deposit system launched by Ankara at the end of last year contributed greatly to strengthening financial stability in the country.

Nabati explained that the financial system announced by President Recep Tayyip Erdogan on December 20, 2021, at a time when regional and global difficulties increased, contributed to strengthening financial stability, reducing demand for foreign currencies, and extending the terms of deposits in Turkish lira.

He added that the protected deposit also had a positive impact on the overall economic budget and played an important role in the growth of the national economy.

The “Turkish Lira Deposit Protected from Exchange Rate Fluctuations” is a financial mechanism launched by Turkey in late 2021, as it guarantees that the depositor in lira will not fall victim to fluctuations in exchange rates and obtain the declared interest, in addition to the difference in the price of the dollar between the times of deposit and withdrawal.

The minister stated that at a time when the world is being dragged into recession due to high inflation rates, interest rates and exchange rates, the protected deposit contributes to overcoming the economic recession, increasing employment and continuing to combat inflation.

He pointed out that the positive results of the economic model based on investment, production, employment, export and growth were not only evident in the decline in inflation, but also in the growth data.

Nabati added, “Our exports break records every month, and Turkey’s share in world trade volume exceeds 1 percent.”

And he added, “Our productive sectors, such as industry and tourism, which create foreign exchange, have become stronger than ever before in the history of the Republic.”

He stressed that with the contribution of the Turkish economic model, the country will be one of the leading global financial, industrial and commercial centers in line with the vision of the “Century of Turkey”.

On October 28, President Recep Tayyip Erdogan revealed the vision of the “Century of Turkey” for his Justice and Development Party, related to the programs and goals of the Republic in its new centenary.

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

Istanbul                Buy                Sale

U.S. dollar           18,6350          18,6370

euro                     19,3580          19,3600

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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           18,6230           18,6250

euro                     19,2790           19,2810

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

Istanbul             Buy            Sale

U.S. dollar        18,6120      18,6140

Euro                  19,4180      19,4200

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The leaders of the Group of Twenty (G20) countries pledged on Wednesday to evaluate the decisions of central banks to increase interest rates, and their social and economic impact on societies and countries.

A statement issued by the G20 following a leaders’ summit held yesterday and concluded today stated that member states will take into account the repercussions of interest rate increases on countries.

Because of strong increases in US interest rates, most emerging and developing economies that need dollars for incoming commodity payments and for saving foreign exchange in the form of debts have been affected.

Interest rate increases have caused an increase in the cost of dollar-denominated imports and added more financial burdens on debt services for most countries in the world.

And the statement added: “Members are highly committed to avoiding any excessive fluctuations in exchange rates, recognizing that many major currencies around the world have moved significantly during the current year.”

He continued, “G20 central banks are monitoring the impact of price pressures on inflation expectations and will continue to appropriately assess the pace of monetary tightening in a clear, data-driven manner.”

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