The Turkish central bank spent $5.4 billion in futile attempts to defend the lira before financial turmoil forced the government to abandon a currency peg, official bank figures showed last week. In its weekly bulletin, the central bank said that official reserves stood at $22.581 billion on February 23, down by $5.362 billion from $27.943 billion on February 16 and just before a fierce political row sparked the financial crisis.
In a bid to contain the ensuing cash crunch, the government abandoned a key currency peg and floated the lira last Thursday, in breach of a three-year anti-inflation program backed by a $4 billion loan from the International Monetary Fund (IMF).
Since then the lira has lost about 30 percent of its value against the dollar amid price hikes for fuel, key goods and services, which were expected to push up inflation.
The change in monetary policy has also led Ecevit's beleaguered government to revise its economic targets and anti-inflation policy of bringing the rate down to 12 percent at the end of 2001 from the end-2000 figure of 39 percent. —(AFP)
© Agence France Presse 2000
© 2001 Mena Report (www.menareport.com)
