The interest rate step taken today by the Central Bank of the Republic of Turkey further increased the volatility of TRY. An official statement was issued by the Ministry of Treasury and Finance, as the depreciation of TRY continued in the following hours.
In its statement, which was published at approximately 17:30, the Ministry actually implicitly addressed the reasons for the rise.
Not China, Turkey Model
The most striking part of the statement made by the Ministry can be highlighted as follows:
… all instruments will be used effectively with the coordination of monetary and fiscal policies. With this model; Due to the dependence of production on imports, the spiral of high current account deficit in periods of high growth and low current account deficit in periods of low growth will be exited.
It is announced to the public with respect.
(16.12.2021) pic.twitter.com/2krdi4fsOb— TR Ministry of Treasury and Finance (@HMBakanligi) December 16, 2021
In this statement made by the Ministry of Finance, it was stated that the target was not the Chinese model, by emphasizing the “Turkish Economy Model” instead of the “Chinese Model” that was emphasized before. The Ministry stated that they will clearly use all the tools at their disposal and stated that they aim to get out of the import-export-oriented cycle in the previous years.
Although it is not yet predictable how effective this will be, all eyes are on the year-end data for now.