Turkish Lira crashes to new low, USD exchange rate tops 15 lira

* Photo: AA

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Following the Monetary Policy Committee meeting of the Central Bank today (December 16), the new policy rate will be announced.

Amid expectations that the policy rate will be cut further by the Central Bank, the Turkish Lira has crashed to new lows. While the exchange rate of the US Dollar (USD) saw 15.28 Turkish Lira (TRY) earlier today, the exchange rate of Euro saw 17.25 TRY and that of Pound topped 20.24.

Yesterday, the USD closed at 14.38 TRY; today, it first saw 14.91 TRY and then topped 15 TRY later in the morning.

When this news report was being written at around 11 am local time in Turkey today, the exchange rate of the USD was 15.22 TRY.

Gold prices at all-time highs

The price of gram gold has also seen all-time highs as it has increased to 877 TRY. While the quarter gold coin's price stands at 1,434 TRY, that of the Cumhuriyet (Republic) gold coin has increased to 5,726 TRY.

The reason for the increase in gold prices is also attributed to the Turkish Lira's loss of value against US Dollar.

Ahead of policy rate decision

The further loss of value of the lira has come ahead of the Monetary Policy Committee meeting of the Central Bank at 2 pm today. It is expected that the policy rate will be further cut by 100 basis points to 14 percent.

The Bank has been cutting the policy rate since September 2021. Over the past year, the rate has been cut by 400 basis points in total. Turkey is the only country cutting the interest rates this year.

In a period when the developing countries have adopted tight monetary policies with interest rate hikes, Turkey's Central Bank has taken up a different path, which has led the Turkish Lira to lose value.

Moreover, no intervention has been made into the markets by the Central Bank in the face of the increases in the foreign exchange rates in the past three days. Coupled with the expectations for a further policy rate cut, it has also contributed to the depreciation of the Turkish Lira. (HA/SD)