Economy of Northern Cyprus

Turkey's central bank posted a 2023 loss of 818.2 billion lira ($25.25 billion), showed its balance sheet published in the Official Gazette on Sunday, on the back of steep loss stemming from the "KKM" foreign exchange-protected deposit scheme.

Turkey's central bank unexpectedly raised interest rates by 500 basis points to 50% on Thursday, citing a deteriorating inflation outlook and pledged to tighten further if significant and persistent deterioration in inflation is foreseen.

President Recep Tayyip Erdoğan has said that his administration had propelled Türkiye's economy to new heights, claiming to have tripled its size during his tenure.

Finance Minister Mehmet Şimşek has ruled out scenarios regarding the real depreciation of the Turkish Lira after the upcoming local elections.

"We do not have an exchange rate target. We are implementing a policy set which makes the lira attractive," Şimşek said in a televised interview on March 4.

Pimco has been wading into Türkiye's bond market, betting that President Recep Tayyip Erdoğan's commitment to a sweeping economic overhaul has set the country on a path to regaining its investment grade credit rating, the Financial Times has reported.

The Central Bank is not intervening in the foreign exchange market, Governor Hafize Gaye Erkan has said, pointing out that the increase in reserves is an indication of this.

"If there had been interventions in the U.S. dollar [in the FX market], reserves would have not increased that much," Erkan said in an interview with daily Hürriyet.

Türkiye's Central Bank has announced additional steps under its plan to continue to simplify and improve the existing micro- and macroprudential framework.

The bank on Oct. 26 delivered a 500 basis points hike in its policy rate, the one-week repo auction rate, from 30 percent to 35 percent. The rate hike, which was the fifth time in a row, was in line with economists' expectations.

The prevalence of retail traders and services unwilling to accept credit cards is on the rise in the occupied territories of Cyprus, warns columnist Jenq Mutluyakali in an article at the Yeni Duzen newspaper.

Money parked at the FX-protected deposit accounts, also known as KKM, has declined for the first time since the start of the year.

KKM deposits fell around 39 billion Turkish Liras from 3.41 trillion liras on Aug. 18 to 3.37 trillion liras ($124 billion) as of Aug. 25, the weekly data from the Banking Regulation and Supervision Agency (BDDK) showed.

Treasury and Finance Minister Mehmet Şimşek has dismissed claims that the Central Bank intervened in foreign exchange rates by selling its reserves.

The Treasury and the Central Bank are working to make Turkish Lira instruments more attractive, Şimşek wrote on X, formerly known as Twitter.