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Turkish finance minister says rise in energy prices accelerating inflation -Breaking

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ISTANBUL, Reuters – The Turkish Finance Minister Nureddin Nebati stated that while the rise in global energy prices is accelerating the inflation rate in Turkey, Ankara will continue to work towards lowering it. He also said that recent falls in the lira were within acceptable levels.

After Russia’s invasion in Ukraine, inflation reached 54% in February. Economists anticipate it will continue to rise towards 70% over the next few months. This is because commodity prices have soared and knocked down the lira.

Nebati, speaking at a conference for business in Antalya said that the government-backed scheme to safeguard lira reserves against depreciation helped end concerns about what he described as “attacks” upon the lira exchange rate.

He said, “What have we seen in the last months is that there is stability and movement within reasonable limits of the exchange rate.”

This year’s 11% drop in the value of the lira against the dollar is mainly attributable to Russia’s invasion Ukraine.

Last year’s currency decline was 44%, mainly due to President Tayyip Erdogan’s long-planned rate cuts. This triggered a currency crisis that sent inflation up 20 years.

Dec.’s currency crisis was halted by the central bank’s costly intervention in forex markets, as well as the protection scheme for lira.

While the central bank lowered its policy interest rate by 500 basis point to 14% from September through December, it maintained it at the three most recent meetings.

Erdogan’s latest economic plan places emphasis on a current surplus, credit growth and exports while keeping interest rates low.

Russia’s intervention in Ukraine is a “special operations” and could increase Turkey’s current deficit due to rising commodity prices, as well as a possible decline in tourist revenue.

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