FX.co ★ Turkish Lira Above 42.6

The Turkish lira has continued its decline, reaching new record lows beyond 42.6 against the US dollar in December and marking a cumulative decrease of approximately 23% for the year. This controlled devaluation, ongoing since July 2023, has been exacerbated by renewed concerns over Turkey's political climate, which have further discouraged investor confidence. Furthermore, all eyes are on the forthcoming announcement of the minimum wage increase for 2026, expected later this month, as it may significantly impact inflation trends for the next year. Turkey's inflation rate saw a more significant reduction than anticipated, dropping to 31.07% in November—its lowest since November 2021. The central bank predicts that inflation will conclude at around 31% in 2025, maintaining a forecast of 16% for 2026. In December 2025, the central bank implemented its fourth consecutive interest rate cut, lowering borrowing costs by 150 basis points, surpassing the 100 basis points reduction that most investors had expected.