Turkish Finance Minister refutes "doomsday scenario" for Lira: foreign capital inflow will support the currency.

Turkish Finance Minister Mehmet Simsek stated that after the local elections in March, foreign funds flowing into Turkey will increase, which will prevent the actual depreciation of the Turkish lira. Simsek said on Monday, "The policies we are implementing now make the lira attractive." "We hope the lira is neither overvalued nor undervalued." The relative stability of the lira since the beginning of the year has heightened concerns that the currency will depreciate significantly after the elections. In the month following the presidential elections in Turkey at the end of May last year, the lira depreciated by more than 20% due to the Turkish central bank reducing artificial interventions in the exchange rate. Simsek said at the G20 meeting held last week that he has held talks with the World Bank and other international lending institutions, and expects them to invest in Turkey after the elections. The lira has fallen 6% against the US dollar so far this year, while Turkey's inflation rate reached 11.5% in the first two months of the year. As of the time of writing, the lira has fallen 0.2% against the dollar, to 31.4196 lira per US dollar. Simsek stated that the Central Bank remains in the foreign exchange market only to meet the needs of the foreign exchange protection deposit plan. The plan, known as KKM, was launched in December 2021 to help reverse the dollarization of deposits and boost the lira. Simsek said that a decrease in the current account deficit, maintaining fiscal discipline, and eliminating election uncertainty will also support the lira, and stated that the Turkish government does not have a target exchange rate. Simsek added that with CPI rising by over 67% year-on-year in February, the Turkish government has a long way to go to achieve price stability, but "the March monthly inflation rate will return to trend levels."