Volatility in FX market temporary, says Şimşek

ANKARA

The recent volatility in the FX market should be viewed as temporary, Treasury and Finance Minister Mehmet Şimşek has said, vowing to maintain “sound” policies.

“The Central Bank is committed to anchoring inflation expectations using all the tools at its disposal. We will continue to tighten fiscal policy to help the Central Bank reduce inflation,” Şimşek wrote on X on March 11.

Post local elections this month, Türkiye will have a long period without elections to pursue the medium-term program, which also includes reforms that will boost productivity and enhance competitiveness, Şimşek said.

The Turkish Liras has lost some 4 percent of its value against the U.S. dollar over the past month.

“We are committed to maintaining sound policies and implementing structural reforms… The program we have unveiled in September is working as expected,” the minister said on the social media platform.

The share of lira deposits in total deposits has risen by 12 percentage points since August, and this trend will continue as confidence in the program grows, according to Şimşek.

Growth rebalancing is well underway; domestic consumption is moderating, and net exports are strengthening, Şimşek noted, reiterating that attaining price stability remains the top priority.

The upgrade from Fitch, raising Türkiye's long-term foreign currency debt rating to B+ from B and the outlook to positive from neutral, reflects the strength of Türkiye’s sound economic policies, the minister said.

Restoring fiscal health is also a key objective, and the fiscal impulse is expected to recede later this year, and income policies should start becoming more supportive, he added.

“We are committed to reducing the fiscal deficit, including earthquake-related expenditures, to under 3 percent of GDP next year,” Şimşek said.