Currency depreciation plagues Turkey's new 'record-high' minimum wage

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On June 20, Turkey's minimum wage increased by 34 percent from 8,506 TL to 11,402 TL, effective from July 1. This hike marked the highest minimum wage in the country's history.

However, the depreciation of the Turkish lira against the US dollar within three days of the announcement reduced the value from an initial equivalent of 482 dollars to 452 dollars as of today (June 23).

The previous minimum wage suffered the same fate, initially established at approximately 455 dollars has now dwindled to a mere 332 dollars.

First interest hike in two years

Although the lira has been losing value in recent years, Turkey's Central Bank's decision to raise its key policy rate from 8.5 percent to 15 percent yesterday (June 22) caused an immediate depreciation of the lira by over 2.5 percent.

This decision marks the first rate hike in over two years, yet many analysts expected more significant adjustments. However, the interest increase indicates a possible departure from President Recep Tayyip Erdoğan's unconventional belief of reducing interest rates instead of increasing them to tackle inflation. (VC/WM)