Turkish Energy Ministry diminishes forex purchase slices

ANKARA

"I instructed to buy foreign exchanges in smaller portions to avoid creating adverse effects in the market,” Minister Taner Yıldız stated. AA Photo

The energy minister is to cut back the amount of U.S. dollars it purchases for the energy institutions’ payments in a bid to avoid damaging the already fragile Turkish Lira.

“We sometimes buy $500 to $700 millions worth of foreign exchanges from the market for natural gas payments of [state-owned pipeline company] Botaş. We saw this causes small wiggles in a negative way,” Turkish Energy Minister Taner Yıldız told a group of reporters Jan. 27.

“Therefore, I instructed to buy foreign exchanges in smaller portions to avoid creating adverse effects in the market,” he stated.

The lira has plunged about 10 percent since mid-December - hitting new lows almost daily this year - battered by the political turmoil and concerns about its gaping currency account deficit. The currency was already under pressure from the U.S. Federal Reserve’s tapering stimulus plans.

Speaking over the weekend Yıldız had said the devaluation of the lira has been affecting the energy costs as well, adding headaches to the country already suffering from wide current account deficit aroused by huge energy dependency.

Yıldız said he was still optimistic that the lira would rise to around 2.05 to 2.10, which is the level that the sector can handle according to him. He had calculated that the cost of foreign exchange developments would be around $7 billion with the current level of the lira at around 2.3, but it would drop to $2 billion if the 2.05 - 2.10 band were attained.