The Turkish lira, has sunk to record lows on Friday morning (23 June) after the country's central bank almost doubled interest rates in an attempt to stabilise the prolonged crisis affecting the country's currency and economy.
On Thursday (22 June), the central bank hiked interest rates from 8.5% to 15% in the country's first interest rate hike since March 2021. This increase was still behind Reuters news agency's prediction of a hike to 21%, however.
Since incumbent President Recep Tayyip Erdogan's election victory in May, the lira has continued its fall against the US dollar. On 24 March 2023, the Turkish currency was trading at 19 lira to the dollar, and by Monday 29 May had further sunk to around 20 lira to the dollar.
Since then, however, the lira has sunk even further to almost 25 lira to the dollar on Friday morning. Meanwhile, according to government statistics, the country’s annual inflation rate for May stood at 39.59% while last October saw Turkey’s inflation rate soar to 85.51%.
″[The lira] is tanking big time and probably will continue to do so as they attempt to play catch up," Steve Hanke, professor of applied economics at Johns Hopkins University told CNBC, adding that the central bank decision is "a little bit behind the curve."
Turkish Finance Minister Mehmet Simsek said that a predictable fiscal policy and free exchange rate regime will "ensure that the Turkish lira regains stability and becomes a reliable currency", according to CNBC.