The Turkish lira traded near historic lows at 34.5 per USD, reflecting ongoing concerns as Turkey adopts more traditional economic measures.
Central Bank Holds Rates as Inflation Eases
In November, the Central Bank of Turkey kept its key interest rate steady at 50% for the eighth consecutive month. While inflation slowed slightly to 48.58% in October from 49.38% in September, it exceeded market expectations for both months.
This inflation overshoot has led investors to adjust their expectations, delaying predictions for interest rate cuts to 2024. Earlier this month, the central bank revised its inflation forecasts upwards, projecting a 44% rate by the end of 2024 (up from 38%) and 21% by the end of 2025 (up from 14%).
Market Impact and Dollar Interventions
Reports suggest some traders are unwinding carry trades, influenced by state banks intervening to sell USD at weaker lira levels. Such measures indicate efforts to stabilize the currency amid market volatility.
