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Data on inflation in Turkey dropped the national currency to a record low

TURKEY (OBSERVATORY) –┬áToday, the rate of the Turkish national currency – lira – fell to a record low level paired with the US dollar after the release of official data on April inflation, which were worse than market expectations.

In the course of trading on Thursday, the lira exchange rate against the dollar fell by 1.3% – to 4.2296 lire per dollar. In relation to the euro, the Turkish national currency dropped 1.6% to 5,0731 lira.

Over the past 2 months, the lira exchange rate to the euro has fallen by 10% to the bi-currency basket (dollar and euro), reports Bloomberg. Since the beginning of the year, the lira has become cheaper at the maximum rate among all currencies of developing countries, except for the Argentine peso: 11.4% to the dollar and 11.3% to the euro.

The growth of consumer prices in Turkey increased in April to 10.85% in annual terms, the maximum for 4 months, from 10.2% in March. Analysts on average expected 10.5%.

Housing and utility services, transport, household appliances, clothing and footwear have risen in price most. The rise in food prices slowed from 10.4% in March to 8.8% in April, while energy prices rose by 12% after rising by 8.3% a month earlier.

Core inflation (excluding food, tobacco, gold and energy) accelerated from 11.4% in March to 12.2% in April.
At the same time producer prices in Turkey rose in April the fastest pace since November – by 16.37% in annual terms.

Earlier this week, the head of the Central Bank of Turkey, Murat Cetinkaya, warned of the volatility of inflation due to the rising cost of imported goods.

This year many investors called on the Central Bank of Turkey to raise interest rates in order to prevent overheating of the economy, but the central bank and the government, on the contrary, adopted a number of measures aimed at stimulating growth.