FX.co ★ Turkish Lira Extends Steady Depreciation

In June, the Turkish lira depreciated beyond 39.5 per USD, continuing its downward trajectory as the central bank adjusted policies to strategically control the currency's weakening. The Central Bank of the Republic of Turkey (TCMB) upheld its key interest rate at 46% during its June meeting, aligning with market expectations to maintain the 350 basis-point rate hike introduced earlier in the second quarter. This adjustment came in response to the lira's selloff following the arrest of Ekrem Imamoglu, the Mayor of Istanbul and a significant political adversary of President Erdogan. This event spurred the largest protests seen in over a decade and intensified concerns over increasing political instability. Alongside the elevated policy rate, the central bank also implemented various measures to curb lira liquidity and heightened the reserve requirement ratio for foreign liabilities.