The Turkish lira is not showing any signs of stabilization. The currency keeps on hitting new all-time lows against the US dollar. The official exchange rate broke the psychological level of 3 liras for one US dollar. Both domestic political situation and various economic factors are putting downward pressure on the national currency.
Besides, the Turkish government failed to form a coalition, and the regulator has not made any attempts to improve the situation. The country’s authorities decided not to take any measures; however, there is a necessity to cool down speculators. Moreover, according to the statement, the regulator will try to cope with the problem only after the Fed decides on the key interest rate. Thus, the Turkish government soothed speculators providing them with additional time to “play against the lira”.
On this background, in August, inflation growth accelerated to 7.14% on a yearly basis compared to 6.8% in July. The largest rise was logged in prices for hotel and restaurant services as well as food. Besides, inflation growth amid lower energy prices surprises economic observers. Analysts suppose that the lira will extend depreciation. During one year, the Turkish national currency has lost 45% against the US dollar becoming the third worst performing emerging market currency after the Brazilian real. However, the situation can change a lot as the lira is likely to touch another all-time low.
