Lira Depreciation: CBRT’s Managed Path Fails to Address Inflation Risks

ANKARA (KFK Ajans) - Commerzbank’s Tatha Ghose reports that Central Bank of the Republic of Türkiye (CBRT) Governor Fatih Karahan claims a faster Lira depreciation is being allowed to avoid a sharper future devaluation. However, Ghose argues that the USD/TRY remains on a mechanically managed, roughly 20% annualised depreciation path, which is still too slow versus 30–35% inflation.

Kritik Zirvede Alınan Kararlar

Karahan argues that weaker economic activity has reduced inflation pass-through, making this an opportune time to adjust the currency’s path. However, Ghose points out that we do not detect a discernible acceleration in the pace of depreciation in recent days or weeks. The lira has been on a steady, rapid depreciation path in any case, annualising to around 20% in recent months.

Anlaşmanın Sahaya Yansımaları

The straight-line trajectory has been maintained with the help of FX intervention by the central bank and state-owned banks, which is well known and recognised by the FX market. We have often cited the mechanical-looking intraday trading pattern of USD/TRY to argue that the lira is not a free-floating exchange rate in any conventional sense. The familiar pattern remains one of flat segments followed by breaches of successive levels of defence.