IMF managing director Christine Lagarde urged the Turkish government to preserve the independence of its central bank after confusion sent the lira sliding.
Mixed signals about whether the central bank is free of political interference created a sense of uncertainty among investors, putting the currency under pressure, Lagarde said in an interview with Bloomberg Television in St Petersburg, Russia.
“In terms of monetary policy, it’s always better for all political leaders to let the central bank governors do the job that they have to do, and to preserve and secure their independence,” she said.
Photo: AFP
Turkey was engulfed by a currency crisis this month as Turkish President Recep Tayyip Erdogan said he would exert greater power over central banking if he won reelection.
He subsequently pledged allegiance to global principles on monetary policy and the central bank boosted interest rates.
As a selloff in the lira spiraled toward a full-blown crisis on Wednesday, the central bank announced an emergency increase of its top rate by a 3 percentage points to 16.5 percent, a move designed to put a floor under Turkey’s currency.
The decision was the outcome of rounds of talks that started in earnest three days earlier, when Turkush Deputy Prime Minister Mehmet Simsek and Minister of Finance Naci Agbal convened an emergency meeting with central bank Governor Murat Cetinkaya to address the crisis, the sources said, declining to be identified because of the sensitivity of the information.
That the bank was unable to move immediately and that its move ultimately required the intervention of Turkish Prime Minister Binali Yildirim two days later points to tension over monetary policy at the top of Turkey’s government.
“Some of the comments made alerted the international community and particularly the investors to the fact that suddenly the central bank of Turkey could be under directions, instructions, or influence,” Lagarde said. “That has created a sense of uncertainty and a lack of confidence, which has found its way in the market.”
On Argentina, Lagarde said the IMF has been working actively with its officials to design measures to help stabilize the situation in its economy and restore confidence.
She said the process was “progressing well.”
“We are really moving ahead and we have committed to [Argentine] President [Mauricio] Macri that we will do the best we can in order to move expeditiously and efficiently in order to change the perception about Argentina and the perception that people have about our role,” she said. “So I am very, very focused on that relationship.”
Lagarde said the current outflows seen in emerging markets were expected, but that many markets are in much better shape today than at the time of the “taper tantrum” in 2013.
“We did say that with dollar strengthening and monetary policy tightening in the US we would most likely see a flow back of capital from emerging markets,” she said. “That’s obviously going to unsettle some the emerging markets that have not taken the necessary precautions or are weak in their fundamentals.”
Additional reporting by Reuters
Nvidia Corp’s demand for advanced packaging from Taiwan Semiconductor Manufacturing Co (TSMC, 台積電) remains strong though the kind of technology it needs is changing, Nvidia CEO Jensen Huang (黃仁勳) said yesterday, after he was asked whether the company was cutting orders. Nvidia’s most advanced artificial intelligence (AI) chip, Blackwell, consists of multiple chips glued together using a complex chip-on-wafer-on-substrate (CoWoS) advanced packaging technology offered by TSMC, Nvidia’s main contract chipmaker. “As we move into Blackwell, we will use largely CoWoS-L. Of course, we’re still manufacturing Hopper, and Hopper will use CowoS-S. We will also transition the CoWoS-S capacity to CoWos-L,” Huang said
Nvidia Corp CEO Jensen Huang (黃仁勳) is expected to miss the inauguration of US president-elect Donald Trump on Monday, bucking a trend among high-profile US technology leaders. Huang is visiting East Asia this week, as he typically does around the time of the Lunar New Year, a person familiar with the situation said. He has never previously attended a US presidential inauguration, said the person, who asked not to be identified, because the plans have not been announced. That makes Nvidia an exception among the most valuable technology companies, most of which are sending cofounders or CEOs to the event. That includes
TARIFF TRADE-OFF: Machinery exports to China dropped after Beijing ended its tariff reductions in June, while potential new tariffs fueled ‘front-loaded’ orders to the US The nation’s machinery exports to the US amounted to US$7.19 billion last year, surpassing the US$6.86 billion to China to become the largest export destination for the local machinery industry, the Taiwan Association of Machinery Industry (TAMI, 台灣機械公會) said in a report on Jan. 10. It came as some manufacturers brought forward or “front-loaded” US-bound shipments as required by customers ahead of potential tariffs imposed by the new US administration, the association said. During his campaign, US president-elect Donald Trump threatened tariffs of as high as 60 percent on Chinese goods and 10 percent to 20 percent on imports from other countries.
INDUSTRY LEADER: TSMC aims to continue outperforming the industry’s growth and makes 2025 another strong growth year, chairman and CEO C.C. Wei says Taiwan Semiconductor Manufacturing Co (TSMC, 台積電), a major chip supplier to Nvidia Corp and Apple Inc, yesterday said it aims to grow revenue by about 25 percent this year, driven by robust demand for artificial intelligence (AI) chips. That means TSMC would continue to outpace the foundry industry’s 10 percent annual growth this year based on the chipmaker’s estimate. The chipmaker expects revenue from AI-related chips to double this year, extending a three-fold increase last year. The growth would quicken over the next five years at a compound annual growth rate of 45 percent, fueled by strong demand for the high-performance computing
RSS