FX.co ★ Turkish Lira Maintains Devaluation Rate

The Turkish lira weakened to a new record low of 44.1 per USD in March, maintaining its steady pace of depreciation even after the Central Bank of Turkey (TCMB) intervened in the foreign exchange market to stem the decline. Investor sentiment shifted from emerging market currencies toward the US dollar amid escalating tensions and strikes involving Iran, Israel, and US allies in the Persian Gulf.

In the first week of March alone, the central bank sold more than $8 billion in foreign currency to support the lira. These interventions came despite expectations that heightened inflationary risks stemming from the regional conflict—particularly through surging energy prices—would prompt the TCMB to end its interest rate cutting cycle.

At the same time, the TCMB suspended reverse repo auctions, pushing banks to raise the lira overnight reference rate to 40%. Confidence that the easing cycle had been paused was further reinforced by a rebound in the headline inflation rate, which rose to 31.5% in February—its first increase since September.