Turkey reported a current account surplus in September, the second time since the end of 2022 that it has reached such figures, given that the easing of the trade deficit supports the consolidation of external finances, writes Bloomberg, which is cited by Agerpres.

Data released Monday by Turkey’s central bank showed the current account surplus hit $1.9 billion in September, while analysts polled by Bloomberg had expected $1.4 billion. Data for August were revised downwards, with a current account deficit of $357 million.

The data for September show how the tightening of monetary policy led to a reduction in demand for goods from abroad, increasing the cost of borrowing and limiting the growth of domestic credit. The government expects the current account deficit to be 4% of GDP this year and to decrease to 3.1% of GDP in 2024.

On October 27, the Central Bank of Turkey decided to raise the base interest rate from 30% to 35%. Economist Liam Peach of Capital Economics expects Turkey’s Central Bank to continue raising interest rates by 500 basis points at its next two meetings this year, leading to an improvement in macroeconomic imbalances.

The lira has depreciated nearly 70% in the past two years after President Tayyip Erdogan fired four central bank governors in four years, prompting interest rate cuts despite high inflation that topped 85% last year.

Restoring confidence in the Turkish lira is also a necessity to reduce gold purchases, which have weighed on the current account for a long time, analysts at QNB Finansbank say.

Goldman Sachs Group Inc economists said the slowdown in gold imports was supported by a rise in interest rates on sterling deposits in September. Net imports of non-monetary gold fell from about $3 billion in August to $1.4 billion in September.

For the whole of last year, Turkey’s current account deficit reached 48.7 billion dollars, and this year economists expect a level of 45 billion dollars.