Turkish Lira Depreciates Further

2026-04-06 10:30 By Joana Taborda 1 min. read

The Turkish lira weakened to a fresh record low of 44.5 per USD in April, extending its steady depreciation amid ongoing interventions by the central bank in foreign exchange markets.

The central bank’s disinflation strategy has largely relied on maintaining a real lira appreciation, ensuring the currency does not depreciate faster than the pace of monthly inflation.

Consumer prices rose by 1.94% mom in March, the slowest increase in three months.

Turkish policymakers have responded to the Middle East crisis by tightening liquidity conditions, raising the cost of lira funding, and directing state-run lenders to support the currency in FX markets.

In addition, the government has activated a special “sliding scale” mechanism that adjusts fuel taxes in line with oil price movements to limit the pass-through to domestic prices.

The central bank left borrowing costs steady in March but money markets are increasingly pricing in a rate hike by the central bank this month.



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Turkish Lira Hits Record Low
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The Turkish lira weakened past 45.2 per US dollar in May, falling to a fresh record low and extending its gradual depreciation, helped by ongoing foreign exchange interventions by the central bank. The bank’s disinflation strategy has largely hinged on maintaining a real appreciation of the lira, ensuring the currency does not weaken faster than the pace of monthly inflation. However, price pressures remain elevated. Consumer prices rose 4.18% month-on-month in April, pushing the annual inflation rate to 32.37%, a six-month high and above market expectations of 31%, as higher energy costs linked to tensions in the Middle East added to existing inflationary pressures. Meanwhile, the Central Bank of the Republic of Turkey left its policy rate unchanged in April, as expected, and reiterated its commitment to a cautious, data-dependent approach going forward.
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