The Turkish lira is struggling to recover from the losses it sustained during the currency crisis of December 2021. 1 TRY is valued at 16.35 USD, the lowest point since December. During the peak of the currency crisis, USD/TRY tested the 18.4 mark on December 20, 2021. The Turkish currency lost 9% in May and slumped by 19% since the beginning of 2022, despite currency interventions by the central bank and President Erdogan’s FX-protected lira deposit scheme. In the meantime, annual inflation jumped to 70% in April 2022.
At the beginning of the year, the lira remained relatively stable thanks to government measures to maintain its exchange rate. However, the Turkish government is now increasingly exhausted and cannot keep the Turkish lira afloat. The Central Bank of Turkey supported the lira with currency interventions. However, the central bank’s FX reserves were already heavily depleted in December 2021, and the measure failed to prevent TRY from sliding down.
According to economist Haluk Burumcekci, the Central Bank of Turkey spent $30 billion in January-April 2022 to keep the currency afloat. The regulator intensified its currency interventions in May, he added.