“We told you we were going to beat the CAD in Turkey. The recently announced figures show that this issue is over,” Çağlayan told a press conference in İstanbul on Monday.
The Central Bank of Turkey announced the monthly balance of payments data on Monday. It reported that the country's CAD dropped by more than a quarter to $21 billion in the first four months of 2012, compared to nearly $30 billion during the same period in 2011. “There could have been a steeper decline but what shackled us was the exchange rate. Every 10 percent drop in the euro/dollar exchange rate results in a loss of 4.5 percent in exports volume for us,” Çağlayan said.
Turkey's main trading partner is the European Union but its commercial links elsewhere have substantially improved, particularly in the Middle East and Africa. But because its economy is highly dependent on foreign supplies in the area of energy, any appreciation of the dollar against the euro, which also pushes down the value of the Turkish lira against the greenback, increases its energy bill. It also causes the national economy to produce a larger foreign trade (FT) deficit. With improving terms of trade, however, the Turkish FT deficit dropped by one-fifth to $27 billion this year, from $33.75 billion in the same period of last year.