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The Turkish lira falls to a new record level against the dollar
The Turkish lira fell to a record low of more than 27.236 against the US dollar on Tuesday due to inflationary pressures and the rise of the dollar, bringing its losses on an annual basis to more than 31%.
President Recep Tayyip Erdogan's support for a low interest rate policy despite high inflation led to a currency crisis in late 2021 and pushed inflation above 85% last year.
The central bank, which stopped intervening in the foreign exchange market to support the lira as of June, reversed course and made two strong rate hikes in two consecutive months.
The lira has lost about 24% of its value since the bank's policy changed.
On Sunday, August 20, the Turkish Central Bank said that it had stopped targeting the conversion of deposits in foreign currencies into deposits in lira that enjoy protection from exchange rate fluctuations, adding that this aims to enhance financial stability.
The bank said in a statement at the time, “As part of the simplification process, it was decided to end the procedure that stipulates the goal of converting deposits in foreign currencies into deposits (in local currency) protected from exchange rate fluctuations.”
