Turkish Lira Extends Controlled Weakening

2026-02-04 15:21 By Andre Joaquim 1 min. read

The Turkish lira weakened to a record low of 43.5 per USD in February amid the controlled devaluation by the Central Bank of Turkey, as markets assessed the outlook of currency flows for the year.

The central bank continued to manage their foreign exchange reserves and maintained measures to stimulate lira deposits by domestic investors to control the pace of the currency's depreciation, which resulted in a 20% loss of its value against the dollar last year.

In the meantime, the TCMB cut its benchmark policy rate by 10.5 percentage points to 37% in its January meeting, noting that slowing trends in underlying inflation warrant a softer magnitude of restrictive policy, even though higher food prices supported the headline rate.

The latest inflation rate held close to the 31% mark, firmly above the 27% hike in the national minimum wage for the year, which extended the trend of undershooting official inflation figures to squeeze purchasing power.



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