Devaluation in Turkey: Lira hits a new historic low against the dollar and euro

Turkish lira and US dollar bills in this illustration taken on March 10, 2023. Reuters/Dado Ruvik/Illustration/File

turkish lira This Thursday marked New all-time low against the US dollar and euro When exchanged at more than 30 units per dollar, while the European currency is sold at 33.09 lira.

devaluation of the lira, which has already lost all around 30% of its value and the second in 2022 40%The Turkish economic press gives credit to Increasing demand for dollars in global markets and continued political uncertainty in Türkiye,

Ten years ago, in January 2014, the lira was trading at 2.2 units per dollar,

Analysts also warn that the lira is likely to devalue increase inflationwhich already finished above in 2023 64% And this represents a big problem for the country.

Turkey has consistently recorded double-digit inflation since the end of 2019, and the Central Bank has implemented a policy of raising rates over the past six months to try to control price rises.

A man looks in the window of a butcher’s shop in Ankara, Turkey. February 16, 2022. Reuters/Kagla Gurdogan/File

The Central Bank has set the inflation rate for 2024 36% However many economists doubt whether this figure will be reached.

Inflation rate increased in Turkey in December 64.77% Year-to-date, up 2.79 points from last month (61.98%), closing in 2023 highest level of the entire yearThe Turkish State Statistics Institute (Turkstat) reported last week.

The hotel and restaurant sector was the first to contribute to the strong general increase in prices 93.2%While the smallest increase was 40.4%In the housing area.

December saw an acceleration in annual price growth, contrasting with a slowdown on a month-on-month basis, which analysts attributed to the first effects of monetary policy tightening that began in June.

Consumer Price Index (CPI) increased compared to November 2.93%Less than the month-on-month growth recorded in that month 3.28% (compared to October).

A shop in a market in Istanbul, Türkiye, in file photograph. EFE/EPA/SEDAT Hear

Inter-annual rate of inflation became the same in December 65% Predicted by the Central Bank of Turkey.

On the other hand, analysts agree that 49% increase in minimum wage The starting date from January 1, 2024, announced by the Turkish government on December 27, will mean a further increase in inflation.

Civil servants and pensioners will receive adjustments in their income 31.5%was calculated based on the average inflation of the last semester of the previous year, which was 37.5%,

Opposition parties accuse the government of deliberately declaring inflation rates lower than actual rates so that salaries do not have to be increased so much.

Official year-on-year inflation data published by Turkstat is much less than 127% The calculations were done by ENAG, an independent group of academics and economists.

(with information from EFE)

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