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Turkey ETF Jumps as Ankara Looks to Supportive Policies

This article was originally published on ETFTrends.com.

A Turkey country-specific ETF climbed Thursday as the country's new administration aims to lower interest rates and lower inflation to help support the economy.

The iShares MSCI Turkey ETF (TUR) gained 4.9% Thursday. Nevertheless, TUR is still down 30.1% year-to-date.

Prime Minister Binali Yildirim, whose post will be abolished when President Recep Tayyip Erdogan is sworn in under a powerful new system, said the next government will "take measures" on both rates and inflation, reports Laura Pitel for the Financial Times.

Top Priorities for Turkey

“Lowering interest rates and lowering inflation will be at the top of our priorities,” Yildirim told the state-run Anadolu news agency.

Consumer inflation in Turkey hit a 14-year high of 15.4% in June, which has pushed for calls for a fresh round of interest rate hikes at the next central bank meeting on July 24. Market observers are concerned that Erdogan, whom is a vocal critic of higher rates, will not allow the central bank to hike rates in a timely manner. The president argued that higher rates cause rather than curb inflation.

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The central bank has already hiked rates three times this year as the lira currency quickly depreciated on concerns over Erdogan's economic policies. The lira has depreciated almost 19% against the U.S. dollar so far this year.

Yildirim said the new government will pursue structural reforms but pointed out that “production, employment and exports” should continue to support growth. Turkey's fast 7.4% expansion last year has been aided by government stimulus and incentives, which many observes argue is not sustainable.

“We will also continue to make structural reforms. The public sector will keep making savings,” Yildirim added.

For more information on the Turkish markets, visit our Turkey category.