USD/TRY Shrugs Off Unprecedented Rate Hikes

Summary:
• Turkish Lira has once again plummeted to new lows against the dollar. As a result, USD/TRY has soared to its highest level in history.

Turkish Lira is in a free fall as USD/TRY shrugs off the unprecedented rate hikes. While the recently elected Turkish government has shifted to an orthodox approach to control inflation, the measures have been so far ineffective. Dollar to lira exchange rate is up 8.5% since its August lows.

USDTRY pair refreshed its all-time high on Friday. The pair surged to 27.469 before having a minor correction. At press time, the forex pair stood at 27.418, showing a 0.11% increase for the day. This translates into a monthly gain of 2.85% in September.

Turkish currency is making new lows against the US dollar due to the unprecedented inflation in the country. The recent surge in the dollar strength (DXY) index has added fuel to the fire. Lira showed a strong rebound after a surprise rate hike in August. However, the gains were lost in the following days.

After the recent rate hike in September, the interest rates in Turkey have risen to 30%. This hike didn’t even cause a bounce in Lira, and the currency remained in the tailspin, shrugging off the effect. It will be interesting to see for how long the Erdogan Regime keeps hiking the rates in the country.

Turkish central bank has hiked rates four times since June. The strong surge in USD/TRY has created a cost-of-living crisis for the Turks. It seems that there is very little in control of the government as even consecutive 500-700 bps rate hikes have failed to control the bleeding.

USD/TRY Forecast

It is needless to say that the Turkish Lira is looking extremely weak against the greenback. In 2023, USDTRY has gained a staggering 47.29%. This makes Lira one of the worst-performing currencies in the world. According to major investment banks and leading analysts, a USD/TRY forecast of 30 might be realized in the coming months.

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