Turkey’s finance minister says the rise in energy prices is accelerating inflation

Speaking at a business conference in the southern resort of Antalya, Nebati said a government-backed scheme that protects lira deposits against depreciation had helped eliminate concerns over what he called ‘attacks’ on the lira’s exchange rate.

“What we have seen in recent months is that the exchange rate is stable and moves forward within acceptable limits,” he said.

The lira is down 11 per cent against the dollar this year, mainly due to the economic fallout from Russia’s attack on Ukraine.

The currency had declined 44 per cent last year, mostly after a series of rate cuts, long sought by President Tayyip Erdogan, which sparked a currency crisis and sent inflation to a 20-year high.

The lira protection scheme as well as costly forex market interventions by the central bank helped stem the currency crisis in December.

The central bank cut its policy rate by 500 basis points to 14 per cent between September and December but has kept it unchanged at the last three meetings.

Erdogan’s new economic plan prioritises a current account surplus, exports, credit and growth, while keeping interest rates low.

However Russia’s actions in Ukraine, which it terms a ‘special operation’, risk widening Turkey’s current account deficit, due to rises in commodity prices and a potential decline in tourism revenue.