The Turkish Lira continued its downward trend against the US dollar. On July 18th, the USD exchange rate on the international Forex market increased by another 2.61%, reaching 27.0529 lira at 12:03 PM GMT. This surpasses the 27 lira mark for the first time in history, according to RBC. However, by 12:09 PM GMT, the exchange rate corrected to 26.9495 lira.
Turkey’s annual inflation reached a 24-year high of 85.51% in October of last year, primarily driven by the continuous devaluation of the Turkish Lira due to low interest rate policies. As per Turkstat, the statistical institute of Turkey, annual inflation decreased to 38.21% in June 2023 from 39.59% in the previous month, marking the lowest level since December 2021.
In June, the Central Bank of Turkey raised the policy rate by 650 basis points to 15% and pledged to continue tightening until a significant improvement in inflation forecasts is achieved.
It is anticipated that the Central Bank of Turkey will raise the policy rate by an additional 500 basis points to 20% this week, according to a Reuters survey. The bank will announce its decision on the interest rate on Thursday, July 20th.