With maverick policies, Turkey cannot hope to bring down prices
Stabilising the lira will not be enough to stave off inflation
AT LEAST BY comparison with last year’s disaster, when it crashed by 44% against the dollar, Turkey’s lira has had a good run of late. Since January the currency has lost only 4% of its dollar value. Part of the reason is a scheme to protect lira deposits against swings in the exchange rate, which the government introduced in December, and which has suppressed demand for hard currency. Another factor is a series of interventions in currency markets by Turkey’s central bank. The latest of these came on February 22nd, when the bank reportedly sold about $1bn in foreign reserves, helping the currency absorb some of the shock waves from the run-up to Russia’s invasion of Ukraine.
This article appeared in the Finance & economics section of the print edition under the headline “Getting sticky”
Finance & economics February 26th 2022
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