Turks exchange their liras for foreign currency as inflation accelerates

Turkey’s beleaguered lira weakened by more than 8 percent to hit a record low of 13.96 per dollar late on Tuesday, losing about 45 percent of its value this year and fell almost 30 percent against the dollar in November alone after the central bank lowered interest rates for a third successive month.

The benchmark rate stands at 15 percent compared with annual consumer price inflation of 19.9 percent. The bank has said there is probably room for another cut in December.

Consumer price inflation in Turkey may approach 30 percent in the coming months, Phoenix Kalen, a strategist for French bank Societe Generale, said in a report to clients last week.

Faced with higher inflation and the tumbling lira, Turks could front-load their purchases, exacerbating price pressures brought on by global supply constraints, economists say. Others could exchange their liras for foreign currency, gold or cryptocurrency, they say.

Inflation in Turkey’s largest city of Istanbul accelerated to an annual 24.1 percent in November, the highest level since 2003, BloombergHT television reported on Wednesday, citing data from the Istanbul Chamber of Commerce.

The Central Bank is cutting interest rates even after inflation accelerated to 19.9 percent in October. Turkish manufacturers have reported a record increase in prices during November, the Istanbul Chamber of Industry and IHS Markit said in a monthly survey published on Wednesday.

The Turkish Statistical Institute will announce official November inflation data on Friday. The central bank is next due to decide on interest rates on Dec. 16.