Missing Turkish currency: 1 Turkish lira with Kemal Ataturk’s portrait
Manuel Augusto Moreno | Moment | Getty Images
The Turkish lira hit a new all-time low against the US dollar just before noon local time on Thursday, trading at 30.005 liras to the dollar.
This is the first time that the lira, which had appreciated by 0.17% against the Turkish currency, has exceeded 30 lira against the dollar.
The beleaguered lira has fallen about 37% against the U.S. benchmark over the past year as monetary policymakers seek to combat double-digit inflation by steadily raising interest rates.
The more conventional approach follows years of unorthodox policy in which the Turkish government refused to raise interest rates despite soaring inflation, with Turkish President Recep Tayyip Erdoğan routinely dismissing interest rate hikes as “the bane of all evil.” It is called “The Root”.
Inflation in the country of about 84 million people was an annualized 64.8% in December, up from 62% in November. Turkey’s inflation rate peaked at 85.5% in October 2022, but still improved year-on-year.
The Turkish lira has lost more than 80% of its value against the dollar over the past five years, increasing import costs and external debt costs, and dramatically reducing the purchasing power of ordinary Turkish citizens.
A new finance team was appointed in June last year, and Turkey’s central bank under new governor Hafise Gey Erkan has embarked on a sharp U-turn in raising interest rates. Subsequently, the country’s standard interest rate was raised from 8.5% to 42.5%.