ALBAWABA - The Turkish Lira experienced a drop of approximately 0.2%, reaching its second-lowest level within the year, totaling a decline of 36% throughout 2023. The currency reached around 29.39 against the US dollar, continuing its gradual and persistent decline in the latter part of the year.
According to Reuters, the Turkish government intends to raise interest rates after abandoning its unconventional policy of lowering rates. The lira sharply depreciated during the summer before the declines slowed down in the last months of the year.
The Central Bank of Turkey had approved an interest rate hike in November, raising it by five percentage points to approximately 40%, as part of the consequences of tightening monetary policy. This led to a fourfold increase in lending costs. In an official statement, the Central Bank indicated that the current level of monetary policy tightening is very close to the required level to determine the path of inflation reduction, noting its proximity to reaching the maximum limit for interest rate hikes.
Analysts had anticipated that the Central Bank of Turkey would raise interest rates by approximately 2.5 percentage points before deciding to double it. Turkey's current interest rate is now the highest in the two decades that President Recep Tayyip Erdoğan has been in power, exceeding the interest rates in all other emerging economies.
The Turkish Consumer Price Index, a measure of inflation, rose by about 3.28% on a monthly basis in November, compared to a 2.88% increase in the same period last year, according to data from the Turkish Statistical Institute (TurkStat). Annual inflation reached 61.98% in November, up from 61.36% in October.
