As of September 18, the Turkish lira fell to a new all-time low against the dollar—about 49.65 lira per $1. Since the beginning of the year, the Turkish currency has lost more than 17% of its value.
The pressure has also spread to the stock market. The day before, the main Turkish stock index fell by about 5.7% after one of the major asset management companies was unable to meet investors’ requests for redemptions. This heightened concerns about liquidity problems in investment funds.
In response, the Turkish regulator suspended trading in funds managed by seven companies and ordered the liquidation of 130 investment funds. According to Reuters, this involves a total of 891 billion Turkish lira in assets and approximately 353,000 investors.
Amid the turmoil, the cost of government borrowing has also risen. The yield on Turkey’s 10-year bonds has once again exceeded 32.6%, wiping out several weeks of declines.
The situation is drawing particular attention due to the country’s tight monetary policy. On September 10, the Central Bank of Turkey left its key interest rate at 37%, keeping it unchanged for the fifth consecutive meeting.
At the same time, annual inflation stood at 31.51% in August. The Turkish central bank stated that tight monetary policy will remain in place to further reduce inflation.
As a reminder, the Turkish lira fell below the value of the Ukrainian hryvnia for the first time in 20 years.
Meanwhile, Şimşek called Turkey’s inflation target for 2027 realistic.
The Turkish government aims to bring gold held by households into the financial system.
