Turkish lira hits highest level against US dollar since August

The Turkish lira hit its highest level against the US dollar since August 2020, trading at 7.1919 on Monday.

The Turkish lira, which started the week with an appreciation, is trading at the level of 7.2020 per dollar with over 1.1% increase as of 2 p.m. local time (1100 GMT), compared to the previous closing.

At the same time, the euro/Turkish lira exchange rate fell by 2.1% to 8.6960, and one British pound traded for 9.8750 Turkish liras with a 1.5% decline.

The analysts said downward trend continued in the US dollar/Turkish lira exchange rate with the increasing credibility of the Turkish Central Bank and thanks to the trust in the bank's governor, Naci Agbal.

"The International Monetary Fund's (IMF) forecast that Turkey's economy will expand 6% in 2021 also increased the interest in the Turkish lira. Moreover, the Purchasing Managers' Index (PMI) for Turkey's manufacturing sector rose to 54.4 in January, which shows confidence in Turkey's economy," the analysts noted.

The appreciation of the Turkish lira accelerated with the Turkish Central Bank’s tight monetary policy stance and Agbal's statement that current policies would be maintained until a permanent fall in inflation, said Cuneyt Paksoy, an economist and financial analyst at Anadolu Agency.

"Unless there is a global dollarization environment depending on the dollar index and significant change in the US-Turkey relation, the downward trend may continue in the US dollar/Turkish lira exchange rate," he added.