Revival of relations with EU reduces Turkey’s risk premium: Deputy PM

ANKARA

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Turkish Deputy Prime Minister Mehmet Şimşek has said the revival of relations with the European Union has decreased Turkey’s risk premium, in a televised interview on April 22. 

“Our rapprochement with the EU has reduced Turkey’s risk premium… We have seen a rise in the inflow of funds again, which is obvious in interest rates and the borrowing rates of the Treasury,” he said on Turkey’s NTV, adding that the Turkish Lira has started to bounce back. 

Şimşek noted the rise in optimism in global markets, the revival in Turkey’s reform agenda and the rapprochement with the EU all triggered the inflow of funds to Turkey. 

He also said the assignment process of the new governor of the Central Bank was run quite successfully and investors had full confidence in new chief Murat Çetinkaya, who made a rate cut decision in line with the bank’s road map revealed in August 2015. 

The Central Bank cut the top end of its interest rate corridor by 50 basis points, in line with expectations, on April 20. 

“This move was compatible with the Central Bank’s roadmap and in parallel to the normalization process in global monetary markets,” said Şimşek. 

He also noted it was not good to develop some claims about the role of the Central Bank. 

“The roles of the Central Bank are quite clear and well-defined. Ensuring price stability is the key, and some policies to strengthen the economy are also applied on the condition of not being contradictory to the policies of maintaining price stability. There are already described in the laws,” he said.