The Turkish lira fell for a third day in a row on Wednesday, falling 5.6% and reversing the huge gains it made the previous week, as concerns persisted about high inflation and unconventional monetary policy, according to Reuters.
The losses accelerated after little initial reaction to the central bank's policy document (CBRT) for 2022, in which it said it will monitor risks related to the foreign exchange market and do what is necessary to ensure that it runs smoothly.
The lira fell to the level of 12.45 against the dollar and was trading at 12.3 liras. it has lost 40% of its value this year despite rising more than 50% last week after state-backed market interventions.
"The Turkish Central Bank has no obligation to any exchange rate level and will not make purchases or sales of foreign currencies to determine the level or direction of exchange rates," the bank said.
It said it would closely monitor the impact of its policy decisions in the first quarter and "the policy framework will be reassessed in order to create a basis for sustainable price stability."
The lira rose last week after billions of dollars in state-backed interventions in the market and a government move to cover foreign exchange losses on certain deposits, which brought the currency back to its mid-November levels.
Meantime, annual inflation is forecast to have hit 30.6% in December, a Reuters’ poll found, breaching the 30% level for the first time since May 2003 – six months after Erdogan’s AK Party first came to power.
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