The Turkish lira is sliding again against its US counterpart on Tuesday, despite better-than-expected economic data. Foreign exchange markets are continuing to be bearish on the lira amid continuing inflation concerns and the new central bank leadership. Is there any relief in sight for a struggling lira?

According to the Turkish Statistical Institute, industrial production surged 16.6% year-over-year in March, beating the median estimate of 12.5%. This is also up from 8.9% in February, supported by greater output for durable consumer goods, capital goods, intermediate goods, and energy products. This represented the tenth consecutive month of industrial growth.

On a monthly basis, industrial production rose 0.7%.

Retail sales spiked at an annualized rate of 19.2% in March, up from just 4.7% in February. Retail trade recorded higher transactions for apparel, computers, electronic goods, online sales, and fuel sales.

On a per-month basis, Turkey’s retail sector posted a 5.1% gain.

The central bank reported that the current account deficit tumbled to $3.3 billion, down from $5.45 billion from the same time a year ago. The market had forecast a current account gap of $3.8 billion.

This comes after the government confirmed an unemployment rate of 13.1% in March, a slight improvement from 13.2% in February.

Meanwhile, the Monetary Policy Committee (MPC) released the summary from last week’s policy meeting where it left its benchmark one-week repo interest rate at 19%. Policymakers agreed that the decelerating effects of monetary tightening on credit and domestic demand started to show up in the economy.

Officials note that domestic economic activity is strong, but the economy might face hurdles depending on the progress of the vaccine rollout and the coronavirus pandemic. That said, the central bank will utilize any available policy mechanisms required to support the economic recovery and fight inflation.

The Central Bank of the Republic of Turkey (CBRT) said in the minutes of its latest monetary policy committee meeting:

“The tight monetary stance will serve as a significant buffer against external and temporary volatilities in the context of inflation expectations, pricing behavior and financial market developments.

Accordingly, the policy stance will continue to be determined by taking into account inflation developments and inflation expectations, and at a degree of tightness that will restore the disinflation process as soon as possible and ensure its sustainability until the medium-term targets are achieved.”

The USD/TRY currency pair rose 0.13% to 8.2919, from an opening of 8.2787, at 17:53 GMT on Tuesday. The EUR/TRY advanced 0.36% to 10.0818, from an opening of 10.0419.