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The recent sharp fluctuations in U.S. dollar’s exchange rate should not worry Turkish markets as long as correct macroeconomic policies are implemented, Turkish Finance Minister, Mehmet Simsek said.
Delivering the closing speech of Uludag Economy Summit, Simsek said that steep appreciation of dollaris largely attributed to the figures indicating a steadily recovering U.S. economy and stalling growth in Europe and other major economies. “Yes, exchange rate volatility is important. We pay attention to it. We have sensitivity for it. But essentially important thing is the macroeconomic foundation of a country,” Simsek said. “In countries which lack strong macroeconomic foundations, neither you can achieve a lasting competitive capacity nor you can solve problems through exchange rate policies.” The Turkish lira dropping almost 13 percent since the beginning of the year, second only to Brazilian Real, which has depreciated over 20 percent in same period, has paved the way for anxiety in Turkish markets for the future of economy. Simsek stressed that macroeconomic foundations of Turkey are very strong and also there is a strong will, political stability and a good structural reform program to address all other areas of economy demanding attention. “Is there a problem in our fiscal policies? Is there a problem regarding the sustainability of debts? Will this exchange rate movement affect current account deficit positively or negatively?” Simsek asked. “Consequently this movement of exchange rate will have a temporary effect. But I believe just after the elections, with the help of our strong reform program, political stability and robust macroeconomics foundations, Turkey will take the road of strong growth,” he said. Regarding the Turkey’s chronic headaches in economy — high inflation and current account deficit –Simsek pointed out the structural nature of this problems and said that detailed structural reform packages announced recently by the government would be key to addressing these problems.
