The Turkish lira is crashing to a fresh record low in the middle of the trading week. The lira, which has been one of the worst-performing currencies in 2020, has repeatedly recorded all-time lows. Depleted foreign exchange reserves, slumping economic data, and geopolitical tensions â Ankara is facing pressure on many fronts, and this has weighed on the lira.
On Wednesday, Treasury and Finance Minister Berat Albayrak released details of Turkeyâs New Economic Program (NEP). This is a three-year economic blueprint and the 2021 central government to resuscitate the economy. The measures reflect todayâs current post-coronavirus conditions, as well as the financial restraints faced by the government.
Although the data has been better than Turkeyâs regional trading partners, some of the latest figures have been disappointing. This month, officials have reassured the public that the worst is behind the country. The Medium-Term Financial Plan consists of total income and spending estimates until 2023, as well as deficit targets and borrowing status.
Still, Ankara has lots of work to do to improve inflation, employment, growth, exports, and current account balance for the 2021-to-2023 period.
On the data front, retail sales rose 1.4% in August, down from the 9.2% surge in July. At an annualized rate, retail sales have advanced 5.8%, down from the year-over-year growth of 12.5%.
Industrial output did come in a better-than-expected spike of 10.4% in August. Automobile production climbed at an annualized pace of 4.3% in September, down from the 44.3% pop in August.
The unemployment rate was unchanged at 13.4% in July.
The current account deficit deepened to -$4.63 billion in August, slightly worse than the -$4.6 billion in the previous month.
Next week, the central bank will hold its October policy meeting. Policymakers surprised markets last month by raising interest rates by 200 basis points, but analysts anticipate that Turkey will keep its benchmark repo rate at 10.25%.
The lira has also come under a lot of pressure on the intensifying Armenia-Azerbaijan conflict. Reports are conflicting about Turkeyâs involvement so far, but President Recep Tayyip Erdogan has stated that Armenia is a threat to peace. The two nations are engaging in a battle over a disputed border â Nagorno-Karabakh â that has been the source of tensions since the fall of the Soviet Union.
The USD/TRY currency pair fell 0.11% to 7.9135, from an opening of 7.9217, at 14:06 GMT on Wednesday. The EUR/TRY rose 0.21% to 9.3084, from an opening of 9.3041.
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