The dollar/Turkish lira exchange rate reached a historical high; at trading on Thursday, January 11, it exceeded 30 liras per dollar for the first time in history. This is evidenced by trading data on the international Forex market, writes Investing.
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What is happening to the lira exchange rate
In 2023, the Turkish lira fell against the dollar by about 60%, despite seven increases in the Central Bank rate in a row. The first increase in this cycle occurred in June, when the regulator almost doubled the rate – from 8.5% to 15% per annum. By the end of 2023, the rate reached a new high in 20 years – the Central Bank of Turkey raised it to 42.5%.
Monetary policy in Turkey is being tightened to combat high inflation. In December 2023, inflation in Turkey rose to 64.8% year-on-year, up from 62% in November.
Turkey's central bank began tightening monetary policy after President Recep Tayyip Erdogan appointed the head of the regulator, Hafize Gaye Ercan. Previously, Erkan held senior positions at Goldman Sachs and First Republic banks.