FURKAN – Lira still weak as Babacan laments Turkish financial debates

Lira still weak as Babacan laments Turkish financial debatesDeputy Prime Minister Ali Babacan said on Friday that arguments between politicians and bureaucrats regarding the Central Bank of Turkeyand#39s monetary policy have contributed to the fluctuations in the value of the Turkish lira against the US dollarYet, his words failed to prevent the lira from falling to a fresh low of TL 2649 against the US dollar on Friday.Speaking at the UludaI Economy Summit in the western province of Bursa, Babacan said: andldquoThe euro and the dollar can appreciate or depreciate against each other by 5 percent a week.

It is a high percentage and a high volatility. It is a hard job to manage.

Such an uncertain atmosphere prevails in the world [today]. It affects all developing markets as well as ours.

Some fluctuations [in lira dollar parity] have occurred in the last three to four weeks [in Turkey] as well. Some arguments among ourselves have probably increased the size of fluctuations.

andrdquoOutlining that the depreciation of domestic currencies is not unique to Turkey, Babacan said he has observed similar movements in many other countries over the same period. Babacan added that messages regarding the monetary policy of the nation should only come from the bank itself, implying his discomfort about the continuous attacks made by politicians against Central Bank Governor Erdem BaII over the bankand#39s interest rate policies.

Turkeyand#39s agenda has long been replete with debate over interest rates, with President Recep Tayyip ErdoIan and his supporters showing their distaste for the central bankand#39s current stance and accusing those who defend high interest rates of treason. Amid harsh quarrels between politicians and market experts championing the independence of the bank, the Turkish lira has hit record highs against the US dollar on multiple occasions.

Rebounding from last weekand#39s all-time high of 2647, the lira firmed to just below 260 on Thursday after BaII gave a briefing late on Wednesday fueling hopes it would ease tension. But the lira weakened to 2649 on Friday, creating yet another fresh record and leading currency falls against the greenback among all developing markets.

The independence of the central bank was also referred to by Cansen BaIaran Symes, the recently elected chairman of the outgoing Turkish Industrialists and Businessmenand#39s Association (TuSIAD). Speaking to a private TV channel, Symes said it is highly important that the central bank is able to use its tools.

Recalling the recent meeting between BaII and ErdoIan, Symes said: andldquoThe meeting was extremely positive. We see signs of a mutual understanding of roles.

The confirmation of the independence of the central bank was a powerful indicator The fluctuation in currency underlines the uncertainty once more. The business world has gone through uncomfortable days.

We cannot say that the unrest [in currency] has been removed [for now].andrdquoBabacan also pointed out the importance of the rule of law and said there are several ways to sustain stability in a country.

Underlining that even many oppressive regimes succeed in ensuring stability in their economies, Babacan said Turkey needs to secure a system with no gray areas, where the Constitution and the regulations are clear, vested rights are fully protected and the judicial system works fast, fair and impartially.The two-day summit, which was organized by the Capital and Ekonomist magazines, began on Friday with a panel titled andldquolobal agenda of a leaderandrdquo.

Ibrahim anakI, Turkish executive board member at the International Monetary Fund (IMF) also took the floor on one of the eventand#39s side meetings. He said if a country wants to shift to a high-income category, it should already have rich natural resources or try to boost personal saving ratios.

Maintaining that the IMF bases its suggestions for monetary policies regarding the risks and challenges that country groups face, anakI said the fund aises countries with deflation risks to back growth and employment however, he added the movement range in countries with high inflation rates is much more limited.No freedom brings no economic developmentBegumhan DoIan FaralyalI, the chairman of Turkish conglomerate, highlighted the imperfections of Turkey regarding key development indices during her speech at the event and said all these indices show freedom levels of countries in common.

FaralyalI said: andldquoEconomic reforms should be taken in Turkey. Turkey is ranked at 54th place in the Global Innovation Index.

It is, meanwhile, in 64th place in the Social Development Index. Turkey lies in 154th place in terms of global freedom of speech.

The country ranks 77th in the global happiness index. The top countries at these indices distinguish with their economic developments also.

The common ground of these rankings is the andlsquofreedomand#39. Freedom is a must of innovation and so is innovation of economic improvements.

andrdquo FaralyalIand#39s speech received a big hand from the audience.

SOURCE: Today’s Zaman