The disappearance of the Turkish currency: one Turkish lira with a picture of Kemal Ataturk (Turkish) on it.
Manuel Augusto Moreno | moment | Getty Images
The Turkish lira hit a new record low against the US dollar on Thursday, trading at 30.005 to the dollar before noon local time.
This is the first time that the lira has broken 30 against the dollar, which rose 0.17% against the Turkish currency from the previous day’s session.
The beleaguered lira has fallen by about 37% against the US benchmark over the past year, as monetary policymakers try to combat inflation exceeding 10% by steadily raising interest rates.
The more conventional approach comes after several years of unconventional policy during which Ankara refused to tighten interest rates despite ballooning inflation, while Turkish President Recep Tayyip Erdogan routinely described rising interest rates as “the mother of all evil.”
Inflation in the country of about 84 million people rose to 64.8% year-on-year in December, compared to 62% in November. This is still an improvement on the previous year, after Turkish inflation peaked at 85.5% in October 2022.
The lira’s weakness comes as Turkey’s top financial officials gather at JPMorgan’s Wall Street headquarters in New York for investor presentations focusing on the country’s monetary policy, banking, assets and financial markets.
Dubbed Investor Day, the inaugural event will feature question-and-answer sessions and include presentations from Turkey’s new central bank governor, Hafez Gay Erkan, who was appointed in June 2023, on a range of topics, such as the country’s anti-inflation path. . Turkish Finance Minister Mehmet Simsek will give virtual presentations on Turkey’s financing outlook and fiscal policy.
Turkish newspaper Daily Sabah reported that the event will be attended by more than 200 senior executives from major financial institutions, including Vanguard, BlackRock, Goldman Sachs, Morgan Stanley and JP Morgan.
The Turkish lira has lost more than 80% of its value against the dollar over the past five years, increasing import costs and foreign debt and significantly weakening the purchasing power of ordinary Turkish people.
A new finance team was appointed in June last year, and the Turkish Central Bank began to change course sharply, raising interest rates higher under Erkan’s supervision. The country’s benchmark interest rate has since been raised from 8.5% to 42.5%.