- POSTED: 02 Feb 2014 02:32
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Turkey's finance minister said Saturday the government has no plans to limit capital flows to stop the slide of the lira, pledging market-friendly policies regardless of recent currency woes.
ISTANBUL: Turkey's finance minister said Saturday the government has no plans to limit capital flows to stop the slide of the lira, pledging market-friendly policies regardless of recent currency woes.
"In recent days, there has been unwarranted speculations about possible changes in Turkey's macroeconomic policies.... Let me make it clear again... Turkey is an open economy. We'll maintain market-friendly, prudent, and sound macroeconomic policies," Finance Minister Mehmet Simsek said on Twitter.
"There'll be no restrictions on capital movements and we've no plans to impose additional taxes on FX (foreign-currency) deposits or other financial instruments."
The lira has lost about a third of its value in six months because of the US Federal Reserve's moves to curtail its easy-money stimulus programme, which has led investors to pull money out of emerging economies -- including Turkey, which to make matters worse has also been hit by instability brought on by a massive corruption scandal.
Turkey's central bank doubled its key interest rate to 10 percent Tuesday, momentarily halting the lira's fall, but a further Fed stimulus cut hit the currency again later in the week.
The central bank decision also irked Prime Minister Recep Tayyip Erdogan, who said it risked putting the brakes on economic growth.
Erdogan said he was ready to jump in with a "plan B" or "plan C" if needed to boost the lira -- raising market concerns he might move to restrict capital flows.
But Simsek sought to downplay those fears.
"Central bank's credibility and its independence is vital to the future of the Turkish economy. My government is committed to maintain this," he said.
The government has left its 2014 economic growth forecast untouched at four percent despite mounting warnings from analysts that it will fall short of that target.