Turkey’s finance minister says rising energy prices are accelerating inflation

Speaking at a business conference in the southern resort town of Antalya, Nebati said a government-backed program that protects lira deposits from depreciation had helped stave off concerns about what he called “attacks” on the lira exchange rate.

“What we have seen in recent months is that the exchange rate is stable and moving within acceptable limits,” he said.

The lira is down 11% against the dollar this year, mainly due to the economic fallout from Russia’s attack on Ukraine.

The currency was down 44% last year, mostly after a series of rate cuts, long desired by President Tayyip Erdogan, triggered a currency crisis and sent inflation to its highest level in 20 years.

The system of protection of the pound as well as the costly interventions of the central bank on the foreign exchange market helped to stem the monetary crisis in December.

The central bank cut its key rate by 500 basis points to 14% between September and December, but kept it unchanged for the last three meetings.

Erdogan’s new economic plan prioritizes a current account surplus, exports, credit and growth, while keeping interest rates low.

However, Russia’s actions in Ukraine, which it calls a “special operation”, are likely to worsen Turkey’s current account deficit, due to rising commodity prices and a potential drop tourist receipts.