Economics Professor Duran Bülbül: 'Foreign exchange is being suppressed, the disinflation process could be strained'

Economics Professor Duran Bülbül made assessments regarding the foreign exchange policies implemented in Turkey and the disinflation process. Bülbül stated that while a slowing in the rate of price increases is defined as disinflation, this does not mean that inflation has fallen.

Bülbül stated that attempts are being made to keep the exchange rate under control by suppressing it, while expressing that falling interest rates cause an increase in foreign exchange. "As interest rates fall, the exchange rate rises. To prevent this increase, the Central Bank intervenes by selling foreign currency to the market. However, the market has priced the dollar at the 42 TL level based on current inflation and economic balances," he said.

Stating that inflation in Turkey is largely driven by import and cost-push inflation, Bülbül emphasized that suppressing the exchange rate could become unsustainable after a certain point. "After a point, it will not be possible to continue this pressure. Especially if the pressure on the foreign trade deficit and foreign exchange reserves increases, it will become difficult to prevent the upward movement of the exchange rate," he said.

Economists point out that for the disinflation process to progress in a healthy manner, volatility in the exchange rate must be kept under control. However, the long-term effects of current policies and their reflections on market balance continue to be a subject of curiosity.