Turkish central bank forex reserves dives

Govt eyes tighter controls

ISTANBUL, Oct 11, (RTRS): The Turkish central bank’s gross forex reserves fell to $66.29 billion on Oct 5, marking a decline of nearly a third from a year earlier, data from the bank showed on Thursday.

A year ago, forex reserves stood at $93.654 billion. Foreign currency held by locals in Turkey fell to $153.43 billion on Oct 5 from $154.36 billion a week earlier.

Meanwhile, Turkey’s current account showed a surplus of $2.592 billion in August, its first positive reading in three years, central bank data showed on Thursday, as the currency crisis drove up the price of imports and brought economic slowdown.

The surplus of $2.592 billion compares with expectations of a surplus of $2.5 billion, according to the median estimate in a poll of ten economists by Reuters last week.

It marks the first surplus since September 2015.

In July, the current account deficit was $1.778 billion. In 2017 the current account deficit was $47.1 billion.

Along with persistent doubledigit inflation, Turkey’s longstanding current account deficit has been a source of concern for investors, as it makes the economy reliant on speculative foreign inflows to finance the shortfall.

The lira’s 40 percent tumble this year has knocked global financial markets and put Turkey’s economic woes in sharp focus. Investors are particularly worried about the outlook for the banking sector and the real economy.

The trade deficit, which makes up the biggest portion of the current account, fell 59 percent yearon-year in August, reflecting the decrease in imports due to the weaker lira.

Price

Turkey ordered governors across the country to impose tighter controls and fines on those carrying out steep price hikes due to economic developments, the interior ministry said on Thursday.

Turkey’s economy has in recent weeks been battered by a currency crisis that saw the lira plunge more than 40 percent this year and inflation surge to nearly 25 percent, a 15-year high.

As prices rose across the board, President Tayyip Erdogan called on Turks to report stores and “opportunists” that were excessively hiking prices, and vowed to raid their stores if necessary.

Finance Minister Berat Albayrak on Tuesday also announced a plan to cut prices by 10 percent in an attempt to combat rising consumer prices.

On Thursday, Interior Minister Suleyman Soylu sent a notice to governors in all 81 provinces asking for measures to be taken against those “taking advantage” of volatile exchange rates to hike prices, the ministry said in statement.

“It was determined that some storekeepers, firms and companies have in recent days imposed steep price hikes to products and services provided for the citizens’ needs; that some products have been kept in stocks to cause a hike in prices,” the ministry said.

“This has caused a situation that threatens the prosperity and well-being of citizens,” it said, adding that those not complying with the new measures would be subject to fines.

The government has also previously made it illegal for companies to arbitrarily impose price increases if they were not impacted by a rise in input costs or the exchange rate.

The meltdown in the lira was prompted by a bitter row with the United States and concerns about Erdogan’s influence over monetary policy, but the government has cast it as the result of an “economic war” against Turkey.

Already strained ties with Washington neared a breaking point over the trial of US evangelical pastor Andrew Brunson in Turkey on terrorism charges, which he denies.

Despite pressures from the US administration, Erdogan has said he was not in a position to interfere with judicial matters and has called on everyone to respect the court’s rulings.

The next session in Bruson’s trial will be held on Friday.

Turkey’s Treasury should take over the main opposition party’s shares in Isbank, the country’s largest listed lender, President Tayyip Erdogan was quoted as saying on Thursday, sending the bank’s shares down.

The Republican People’s Party (CHP) owns a 28 percent stake in Isbank , bequeathed to it by Mustafa Kemal Ataturk, founder of the Turkish Republic.

Erdogan told reporters on a flight back from Hungary that the treasury should take over the opposition party’s shares, the Hurriyet newspaper quoted him as saying.

Ties

Also:

ISTANBUL: Turkey has transferred the operating rights of seven high-potential coal fields to private companies, Energy Minister Fatih Donmez said on Thursday, in an effort to reduce the country’s reliance on energy imports.

Once a darling of foreign investors, Turkey’s energy sector, which relies almost entirely on imports, has been hit by a sharp decline in the lira. The currency has lost nearly 40 percent of its value this year, sparking worries over its impact on the wider economy and the banking sector.

State pipeline operator Botas raised prices for natural gas used in electricity production by 50 percent in August. Natural gas and electricity prices for residential use have also been hiked for three consecutive months.