Turkish businesses back Central Bank's move

By Gokhan

ANKARA

Turkish businesses have welcomed the Turkish Central Bank's move to limit the depreciation of the Turkish lira by raising the late liquidity window interest rate.

After the U.S./Turkish lira exchange rate reached its historical high at 4.93, the Bank rose the interest rate from 13.50 to 16.50 percent Wednesday.

Following the bank's move, the exchange rate dropped significantly, to around 4.57.

While Turkish business representatives approved the Bank's move, they have also called for fiscal tightening.

Mehmet Buyukeksi, chairman of the Turkish Exporters Assembly (TIM), said that they continued to believe in the Turkish lira and used it in foreign trade.

Fluctuations in the foreign currency market do not reflect realities of the Turkish economy, he underlined in a press release on Thursday.

At the beginning of the year, the USD/TRY rate was 3.78 while the average rate was 3.65 last year. On Thursday it opened at around 4.7.

The Central Bank's Monetary Policy Committee's interest rate decision was the right one, he stressed.

He added: "If required, similar steps should be taken pertinaciously in the coming days."

Turkey's economy has a great potential in terms of industry, exports tourism, he said.

Erol Bilecik, chairman of the Turkish Industry and Business Association (TUSIAD), said the Central Bank's move had relieved the market.

He highlighted politics meant a strong economy and a strong country at the association's high advisory council meeting in Istanbul on Thursday.

"We work to do [our] best but we need to see rational and coherent politics based on global and national data; the economic administration's measures are critical," he said.

He also said Turkey needed to prioritize reforms to solve structural problems.

Tuncay Ozilhan, the president of the TUSIAD High Advisory Council, said the Central Bank needed to take steps independently to fight against inflation.

He added: "We welcomed the prime minister's and president's speeches aimed at fiscal tightening and stability after the bank's move."

He also stressed structural reforms and fiscal tightening needed to be reinforced.

The Turkish Central Bank’s official reserve assets were $110.3 billion -- including $83.4 billion in foreign currency and $25.3 billion in gold reserves -- as of March.