Turkish lira devalued by 13% last month

Baku. 25 November. REPORT.AZ/ Turkey's national currency has devalued by 12.7% against dollars in last month by 12.7% and 17.7% in last two months.

Report informs, devaluation of the Turkish lira caused by strengthening of the dollar in world currency market, decision from the US about increase in interest rates on December 13-14, Turkey's geopolitical position, and problems arose between Turkey and European Union (EU).

Notably, on November 24 EU has decided to freeze negotiations on Turkey's membership in alliance.This decision led to a decline in the national currency in Turkey. Yesterday, the dollar's rate surpassed 3.46 TRY/USD rate and reached a historical record.

After the decision by Central Bank of Turkey (CBT) yesterday morning, the one-week repo interest rate to 8% from 7.5%, the upper limit of the interest rate corridor of 8.5% to 8.25% and raises the exchange rate 3.42 TRY/USD from dropped to 3.37.

After the decision by Central Bank of Turkey toincrease its benchmark one-week repo rate by 50 basis points from 7.5 percent to 8 percent at the Monetary Policy Board (PPK) meeting on Thursday the exchange rate declined from 3,42 TRY/USD to 3,37 TRY/USD.

Analytical Group of Report believes depreciation of lira will further continue in stages.

At the year-end, US-dollar rate may rise to 3.50 TRY/USD, while in 2017 to 3.90 TRY/USD.

Overall, depreciation of the lira is expected to be intensified in next 2-3 years.

The reason is protectionist trends in world economy which means policy of restraining trade between states and as an export-oriented country, Turkey will suffer from it. Moreover Turkey is high deficit in balance of payments, decline in tourism revenues and other factors."