The Turkish lira is currently trading at 29.47 against the dollar, losing 0.2 percent of its value. This is proven by trade data.
As of 19.46 Moscow time, the Turkish currency began to strengthen and reached 29.4 lira per US dollar. The depreciation occurred against the background of the Turkish government’s decision to increase the minimum wage (minimum wage) significantly by 49% to 17,002 lira ($578) for 2023.
Analysts at investment banks Goldman Sachs and Morgan Stanley warn that such a significant increase in the minimum wage could force Turkey’s Central Bank to tighten monetary policy further to control inflation.
“There is very strong growth potential in Turkish assets in 2024 if sound economic policies are adhered to, but investors will be wary of Erdogan’s possible populist turn ahead of the election,” said Daniel Wood, portfolio manager at William Blair International.
Wood noted that Türkiye’s president had previously fired Central Bank governors who tried to reduce inflation. But this time, senior officials say Erdogan is fully committed to pursuing tough inflation policies.
MUFG Bank Turkey Treasury President Onur İlgen also warns that the sharp increase in the minimum wage will create additional inflation pressure in Turkey.
The Turkish lira has been the second worst-performing emerging market currency this year, after the Argentine peso. Since the beginning of the year, the lira has lost approximately 36.5 percent of its value against the dollar.
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