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Turkish Lira Falls as Current A/C Deficit Rises

Turkish Lira Falls as Current A/C Deficit RisesTurkish Lira Falls as Current A/C Deficit Rises

Turkey’s lira slid against the dollar and euro after the current account deficit more than doubled in January, increasing concern about the government’s economic policies, Anadolu Agency reported. The lira dropped 0.7% to 3.84 to the dollar in Istanbul. The currency declined 0.6% to 4.72 per euro. Turkey’s current account deficit climbed to $7.1 billion in January from $2.7 billion a year earlier as imports surged 39%, the central bank said in a statement on Monday. The rolling 12-month deficit rose to $51.6 billion, or about 5.6% of economic output. Turkey is financing its growing current account gap, the largest in major emerging markets, via short-term inflows into stocks and bonds as foreign investment in the country declines. The government is stimulating economic growth through loan and tax incentives, spurring demand for imports. A sudden outflow of the short-term money, which may be sparked by interest hikes by the US Federal Reserve later this year, could lead to a sudden reversal in economic growth and impact the lira, economists say.

 

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