Today, Monday, the Turkish lira fell to a new lowest level ever during the New Year 2023 transactions, despite the positive data that was issued a short while ago.
The Turkish lira was seen during today’s trading at levels of 18.8302 lira per dollar, which is the lowest ever after exceeding the levels of 18.8229 lira dollars that were recorded on December 27.
Today, Monday, the purchasing managers’ index data for the industrial sector revealed that the index rose in December 2022, to record 48.1 points, compared to 45.7 points in November 2022.
The latest data is the highest for the PMI in the industrial sector since last June 2022, during which it recorded the same levels, compared to 49.2 points.
On the other hand, from today’s positive data, the Turkish lira recorded a new historical level after crossing the barrier of 18.3 dollars for some time before it reduced its losses.
The Turkish lira fluctuates during today’s trading between the levels of 18.8302 dollars and the levels of 18.8302 dollars, while it decreases during these moments within the range of 0.2% at the levels of 18.73 dollars.
The evolution of the exchange rate
The Turkish lira fell during 2022 transactions to an all-time low of 18.8229 lira per dollar on December 27.
During last December’s transactions, the Turkish lira fell from levels of 18.5895 dollars, to close near levels of 18.7 dollars, with a decline of about 1%.
Whereas, since the beginning of the previous year, the Turkish lira fell from levels of 13.3161 dollar liras at the end of December 2021 to the current levels, to lose the Turkish lira in a year by more than 40%.
In 2021, the lira fell from levels of 7.4320 pounds at the end of December 31, 2020 transactions, to levels of 13.3161 pounds at the end of December 2021, declining by more than 79%.
Inflation has been rising in Turkey since September 2021, driven by an unconventional 500 basis point easing cycle that sparked the currency crisis late last year, which was followed by a round of consolidation.
The Istanbul Chamber of Commerce (ITO) said Sunday that retail prices in Istanbul, Turkey’s largest city, rose 2.94% month-on-month in December, with an annual increase of 92.97%.
The organization said wholesale prices in the city, which has a population of about a fifth of Turkey’s population of 84 million, increased 3.71% month-on-month in the same period, an annual increase of 81.31%.
The latest data comes in contrast to Erdogan’s promise after he said earlier that inflation will drop to around 40% within a few months, and then to 20% in 2023.
From September 2021, interest rates fell from 19% to 9% levels last November, down 1,000 basis points, or 10%.
Experts had expected the Central Bank of Turkey to cut interest rates at the last meeting by another 150 basis points to 9%, and to stop easing after that.
According to international banks, monetary policy in Turkey will depend on whether Erdogan will be re-elected this year 2023.
The Turkish president had repeatedly pledged to cut interest rates below the two numbers before the end of the current year 2022, and during the reduction trip, 3 governors of the Turkish Central Bank were changed.
Erdogan, who describes himself as an enemy of high interest rates, aims to boost investments, production, exports and employment while lowering prices as part of his economic programme.