US Dollar sees highest level against lira in 2022

US Dollar sees highest level against lira in 2022
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The ongoing depreciation of the Turkish lira gained momentum this week as the dollar/TL rate saw 18.21, which is the highest exchange rate seen in the year

The dollar in Turkey continued to rise against lira on Thursday amid interest rate hikes by major central banks and worries over the global economic outlook.

Closing at 18.19 on Wednesday, the dollar started above the 18.20 lira band on and hit the intraday high of 18.21.

On Tuesday, a Reuters analysis said Turkey was among the countries to suffer hardest by the US central bank’s (Fed) high interest rate policy.

"There are a few frontier economies like Sri Lanka, Turkey and so on that are going to get hammered if the Fed hikes rates and rates stay high," Reuters cited Eswar Prasad, an economics professor at Cornell University as saying.

Fed Chairman Jerome Powell last week removed all doubts that the Fed will ease monetary tightening soon.

Powell said the U.S. economy will need tight monetary policy “for some time” before inflation is under control.

Last month, British newspaper Financial Times reported that outflow of foreign funds from developing countries is likely to exacerbate the financial crisis and a country of serious concern was Turkey.

"Government measures to support the lira while refusing to raise interest rates -in effect, promising to pay local depositors the currency depreciation cost of sticking with the currency- have a high fiscal cost," FT said.