Understanding the Impact of Interest Rates on Exchange Rates: Insights from the Turkish Lira

2023-09-20 16:32:13

From the point of view of how much the rate influences the exchange rate… It is very difficult to talk in terms of “if only”, but I think my colleagues with an economic education will confirm that if the rate had remained 8.5%, then we would now looked at a different level of the exchange rate, which would most likely be well into three digits.

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The trajectory of the Turkish lira over the past three years shows what happens in an economy where interest rates fail to meet inflation expectations.

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