Turkish lira plunges as state-owned banks cease defense


According to a Bloomberg report, state-owned banks in Turkey have ceased their efforts to support the lira through expensive dollar sales. This has resulted in TRY plunging to levels near 23.10 to the USD. The change in approach could indicate the new finance minister's commitment to implementing a more "rational economic policy." The report also highlighted that the country's state banks refrain from providing comments on their interventions in the market.

Mehmet Şimşek was reappointed as finance minister at the weekend. He held the post from 2015 to 2018. Şimşek is well regarded by foreign investors and has promised to restore "rational" economic policies. That could mean loosening controls previously in place to slow the lira's decline.

The Turkish central bank has implemented significant reductions in key policy rates, lowering them from approximately 20% in 2021 to their current level of 8.5%. Meanwhile, inflation figures have displayed considerable fluctuations, with May recording just under 40%, whereas in October, it had spiked to over 85%.


Image by Şinasi Müldür from Pixabay

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Russell Shor

Senior Market Specialist

Russell Shor joined FXCM in October 2017 as a Senior Market Specialist. He is a certified FMVA® and has an Honours Degree in Economics from the University of South Africa. Russell is a full member of the Society of Technical Analysts in the United Kingdom. With over 20 years of financial markets experience, his analysis is of a high standard and quality.

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