ISTANBUL: Turkey's lira was stronger on Friday after Finance Minister Nureddin Nebati was cited as saying inflation would peak in January and start to fall from May, reaching single digits by June 2023 when elections are scheduled.
The lira was 0.7% firmer at 13.53 to the dollar by 0645 GMT. It weakened 44% last year, with a currency crisis halted last month after currency interventions and a government scheme to protect lira deposits from forex depreciation.
Nebati was quoted as saying in an interview with Bloomberg that the lira deposit facility had attracted 126 billion lira ($9.3 billion), of which 15% came from foreign currency accounts, with some 300,000 people participating in the scheme.
He also said that work on increasing the capital of state banks will be completed before the end of this month.
Turkish lira weakens nearly 3%, giving up Wednesday's gains
Driven by last year's lira plunge, annual inflation surged to a 19-year high of 36.1% in December, the highest under President Tayyip Erdogan's rule, and it is expected to reach as high as 50% in coming months.
But Nebati said it would ease as the summer approaches.
"Currently we are carrying the hump of December. In the summer, both with easing food prices and in terms of global inflation, we will be entering a period where the impact of both of these will lessen," he said.
"I will go into the election with single-digit inflation in June 2023," he said. However, a central bank survey of market participants on Friday showed annual consumer price inflation was expected to be 29.75% at the end of this year.
Nebati also said market interest rates and the central bank's policy rate had started to converge.
The lira crisis in November and December was sparked by the central bank's 500 basis points of rate cuts to 14% since September. It eased policy under pressure from Erdogan, who seeks higher growth by boosting production and exports.
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