Lira descent continues as Turkey inflation set to hit lowest level since late 2021
ALBAWABA – A Bloomberg survey, reported Monday, predicted a decline in the annual Turkey inflation rate, from April’s 40 percent, to 39.2 percent.
This would be the first time the annual Turkey inflation index dips below 40 per cent since late 2021, according to Bloomberg.
The Turkish Statistical Institute announced it would exclude household gas consumption from the May inflation index, based on the assumption that gas will be conveyed to households for free in May.
Turkey’s 3-times-elected President Recep Tayyip Erdogan promised free household gas for the people before the May 14 elections, Reuters reported on April 24.
Accordingly, TurkStat said, gas prices were zeroed out of the inflation calculations.
Meanwhile, the Turkish Lira continued its descent, having fallen below TRY20 per dollar last week.
The lira was quoted falling below TRY21 per dollar on Monday, according to Bloomberg indicative pricing.
Bloomberg’s indicative pricing is said to reflect market levels and not traded or executable prices.
But Google Finance showed a 0.43 percent decline in the Turkish Lira, on Monday, to TRY21.18 against the dollar.
Since the beginning of 2023, Google Finance cites a 12 percent decline, overall, in the value of the lira.
Over the past couple of years, the lira lost 44 percent of its value in 2021 and 30 percent in 2022, according to Investing.com
According to Bloomberg, traders expect more volatility, given that the cost of protecting against lira weakness in the coming six months — versus hedging against gains — rose to a record 21.7 percentage points on Friday.
That’s double January 2023 levels of around 10.7, the New York-based news outlet reported.
For the past two years, the central bank of Turkey has kept its benchmark interest rate unusually low.. Erdogan’s plan for low borrowing costs is to pump up the economy. However, it grossly affected the central bank's hard currency reserves.
