ISTANBUL (Dispatches) – Turkey’s President Tayyip Erdogan says that interest rates and inflation will come down to single digits this year.
Erdogan made the comment in an interview with CNN Turk television.
The Turkish lira was flat on Monday despite another jump in oil prices, and three traders said state banks were again selling dollars to support the currency through market turbulence after the U.S. killing of top Iranian commander General Qassem Soleimani.
The lira was at 5.9735 against the dollar, little changed from Friday's close at 5.9740.
It weakened 11% last year, in part due to Turkey’s military incursion in Syria and the threat of U.S. sanctions, bringing losses over the last two years to 36%.
"The state (banks) are in the market on the forex supply side today too, as they were on Friday,” one trader said. "It is difficult to say how many dollars are being sold but it’s clear they will not allow an excessive loss in the lira’s value.”
Since March of last year, traders have pointed to occasional state bank interventions to stabilize the lira.
The U.S. killing last week of the Iranian commander fueled geopolitical tensions and brought more selling pressure on both the lira and on oil, sending crude prices up another 2% on Monday and hurting emerging-market currencies.
Turkey relies on imports for almost all of its energy consumption including oil.
State banks have not spoken publicly about the interventions, though Turkey’s central bank has said they have been more active in markets this year conducting two-way transactions.
"We can say that there was support for the lira, particularly on Friday, in order to reduce the impact of geopolitical tension,” said a senior banker.